shopping

The other day, I came across an old article (published 2002) from New York Times reprinted on this website. The article is titled “Hijacking the Brain Circuits With a Nickel Slot Machine“.

The article relates compulsive gambling to dopamine activity (dopamine is a naturally occuring chemical in our bodies that responsible for feelings of “pleasure”; it’s the same chemical that swings into action for drug addicts). This is what it says about gambling:

Many people visit a casino, lose money , and are not tempted to go back. But compulsive gamblers seem to have vulnerable dopamine systems,” he said. “The first time they win, they get a huge dopamine rush that gets embedded in their memory. Then they keep gambling, and the occasional dopamine rush of winning overrides their conscious knowledge that they will lose in the long run.

I was wondering how that paragraph would read if we substituted “gambling” and related terms with “shopping” and related terms. Here is how it will read:

Many people visit a mall, buy stuff, and are not tempted to go back. But compulsive shoppers seem to have vulnerable dopamine systems,” he said. “The first time they shop, they get a huge dopamine rush that gets embedded in their memory. Then they keep shopping, and the occasional dopamine rush of buying overrides their conscious knowledge that they will get into debt in the long run.

That makes sense to me :)…I have seen people who behave/spend in exactly that manner. Forgive me for I am being very unscientific and wishful here, but the way I see it, the gambling and spending problems might be related. If that is true, compulsive spending/shopping might also be related to weak dopamine systems, in the same way as compulsive gambling is related. Such dopamine activity is evident (to me) when women shop for clothes and shoes and when men shop for electronics and hardware.

Now, if they can treat compulsive gamblers with medications, they should be able to treat compulsive spenders/shoppers with some medications too. Wouldn’t it be nice to have a pill that you can take a couple of days before Black Friday (or Cyber Monday) and just watch the crazy days go by without feeling the “urge” to shop? :). In some cases, such pills should work well with pills for stupidity. :)Btw, see what it has to say about money:

Several studies were published last year looking at monetary rewards and dopamine. “Money may be abstract but to the brain it looks like cocaine, food, sex or anything a person expects is rewarding,” said Dr. Hans Breiter, a neuroscientist at Harvard. “People crave it.”

And a few interesting words about economic decision making:

“Economists and neuroscientists use the same mathematical equations for modeling market behavior and dopamine behavior,” Dr. Montague said. “Neuroscience may provide an entirely new set of constructs for understanding economic decision making.”

Here are some snaps taken at my local Best Buy store on Black Friday. The two snaps on the top were taken at 1:15 am and the next two were taken at 4:45 am. That is only half the line at 4:45 am, the line snakes behind the store and into a neighboring parking lot. My estimate is about 400 people at 4:45 am.

Some ridiculous stuff

• Average spending per person on this year’s Black Friday: $790 (!!)
• “This is not a toy,” shopper Nuny Grey says of the big TVs. “This is a necessity in television today. This is really not a toy.”
• Last year, women spent $55 billion on electronics — men, just $41 billion. And given the chance to unwrap a flat-panel TV, diamond jewelry or designer shows, a shopping 77 percent chose … the TV.

Holiday Spending Frenzy

With sales up 7 percent from last year, Black Friday forecasts bountiful spending this holiday season. Bianca Solorzano reports.

Black (and Blue) Friday

Over 137 million people are expected to hit the malls tonight battling it out (sometimes literally) for the best deals. Sharyn Alfonsi reports that holiday sales are up by 5 percent from last year.

Here is the irony

Consumer Debt At $1 Trillion

The Federal Reserve reports that the nation’s consumer credit has grown to more than $1 trillion. People are spending more money than they actually have. Sandra Hughes looks at the reasons why.

Oh ! so now we want to wail about consumer debt?

[Numbers and videos source: http://www.cbsnews.com/ ]

I am not very pro-black-friday when it comes to electronic stuff, because I have seen better deals on a lot of stuff on non-black-friday days. But, this thing really got my attention. I stumbled on this piece on Electronista.com and just couldn’t believe my eyes. Here is a screenshot:

If you are looking for a laptop, then there is nothing like that, if it exists. There must be a catch though which is not made very clear in the advertisement. Hopefully people will read it before they spend the money. I think it has got to do something with the 12-month Vonage subscription..that costs about $180+taxes, so it might get a bit expensive-er than $99. In that case, you might want to check Bestbuy.com for a $249 deal for a Toshiba notebook with approximately same configuration.

And if you don’t need a laptop, it doesn’t matter if it’s $99 or $249…you will be wasting your money if you buy one when you don’t need one..so keep that in mind.

Happy turkey digesting all you guys.

Man this Ebates thing is for real :). I had signed up for a Sharebuilder account about 3 months ago through Ebates and it had promised me $20 at the time. Honestly, I was not really expecting to see anything from Ebates…well just because I had never heard of the name before that. Yesterday, I was surprised to see a “Big Fat Check” from Ebates in the mail…..ok it wasn’t really big or fat or anything, but hey $20 is $20….even sweeter because I didn’t have to do anything for it and also got a $50 Sharebuilder bonus in the process.

Now, that I have “verified” that this stuff works, I don’t have any qualms about recommending it. In fact, you can get yourself a head start of $5 (and I will get a $5 bonus too) if you click on this referral link and sign up:

Update: There is a $10 referral bonus offer (you get $10 and I get $10) valid till March 15th, 2007:

This is the referral link for getting $10 bonus (till March 15th) 

This is the regular referral link ($5 bonus) - does not expire.

For those who don’t know what Ebates.com is: It’s a program similar to something like Upromise.com, you buy stuff from major retailers by going through their website , and in return they give you some cashback, or bonus or discount coupons. Always read the fine print before signing up for anything. To make it a bit easier, I am copy-pasting an important excerpt from Ebates’ terms and conditions:

Every three months Ebates sends to its members the Cash Back that they have earned, provided that the member has earned at least $5.01 in Cash Back Rewards. If the member has earned less than $5.01 Cash Back, Ebates will carry the member’s money over to the next check.

Toys”R”Us is offering reduced and sale prices on many items (I especially like the deals on board games).

Shop from home and take advantage of the free shipping too
No coupon codes required.

If you were looking for the Monopoly board game in bulk quantities (to educate neighborhood kids about financial management -:) ), now is the time ! With this offer you can buy two games for $16.48 plus tax.

Finally gave in and bought a Canon Powershot S2 IS digital camera. Emptied my wallet by a cool $283 and change. After giving a thought to Canon S3 IS, I decided it was not worth the additional $73. The only extra stuff in the S3 IS that its black (more professional camera type look), have an additional megapixel resolution and some more shooting modes. Here is how it looks:

And now I can retire my old Kodak CX6230 which has been of great service for the last three years. Here is a picture of the old Kodak:

Also got a 4GB SD card ($90 !) for the S2 IS and now it has enough memory to hold about 4 movies of 8 minutes each!

Stumbled on these items while browsing today:
1. Western Digital 500 GB, Internal SATA Hard Drive for $ 159.99 at Best Buy; Pretty good deal, considering it turns out to be about 32 cents per GB (cheap!). A product file photo from Best Buy is shown alongside.

2. Canon S3 IS, 12X optical zoom digital camera for $ 356 at Amazon. I have been tracking this camera for a long time now, and this has so far been the cheapest deal from a reliable supplier. A product file photo from Pricegrabber.com is shown alongside.

And now, I am in a state of utter confusion. To buy them or not? The deals seem awesome and I have been looking for similar items for quite some time now. However, suddenly my personal-finance-brain has started screaming at my I-want-this-cool-stuff-now brain that I don’t need these things. However, if I let this go now, I am not sure I will see these prices again. It’s time for some “need-based” decisions now.

The cost calculator goes to work usually during the Thanksgiving holiday spending mode. There is always a confusion on which product is better when all of them ‘appear’ to be on sale. Now-a-days I take care of that confusion by on the cost/characteristic basis. The concept has been used in the hard drive/data storage community (wherein characteristic = capacity) since long, but I don’t see it being applied to non-computer related merchandize/services often. Also, the concept is for guys like me (who think that iPod is functionally not much different than other cheaper players) for whom occasionally the cost factor is more important than things that are ‘fashionable’, ‘trendy’ etc.

Here are a few examples:

1. For hard drives and storage systems the cost/characteristic is translated into cost/capacity. It’s easier to decide when drive A is $2/GB and drive B is $7.5/GB. What about the looks and features? Well once you are aware that each GB may cost an extra $5.5, its easier understand whether it’s worth the additional cost. The same logic applies when buying RAM modules, Flash memory/cards etc.

2. MP3 players: $/GB {For those interested, iPod Nano (4 GB) is $63/GB; iPod (60 GB) is $7/GB; Sony Network Walkman (20 GB) is $14/GB}

3. I have also seen it being applied to photo printers, with companies giving an estimate of cost/photo when you use the printer. You can compare that with your Walmart/Walgrees/Sams cost (by the way, on an average the stores are about 10-12 cents cheaper than the printers). That’s helpful; for some the convenience of having a photo printer at home is more important than the additional 12 cents on each photo while for others it may sound too expensive an option.

4. Tires: True cost would be $/thousand miles warranted.{ For a 2000 Camry, Douglas Performance GT ($65/40K miles) is $1.62/Kmile; BF Goodrich ($97/60K miles) is 1.61/Kmile}

5. Cars can also be rated in a similar manner. Net Cost of Car/Anticipated Mileage. Where the Net Cost is equal to Buying Price minus the Resale Value. I won’t be surprised to find a few lower end Fords to be more expensive than some BMWs.

6. You can compare movies rentals Blockbuster, Hastings, Netflix etc. using analogous information. $/movie.

7. Most health insurance cost structures are confusing to understand, but apply similar logic and things will be clear. For example, calculate the true cost of a pair of glasses or lenses. Sometimes people are happy to get the glasses/lenses for free but many times they don’t realize that they have spent more than a fair share over the premiums for the vision policy.

There are more but my lowly mind can’t think of any at present.

Lastly, it goes without saying that one has to be discreet when using this line of thought because occasionally cost might be the least of your worries.