Choices

One thing that I see becoming more prevalent is the fact that people don't make choices any more. I remember when I was a kid, people didn't have the access to money and credit that they have today. This meant that they had to choose their purchases carefully, making sure that they got the most value out of every dollar spent. A simple definition of economics is "the study of choices people make." The more boring, and long, definition is "the study of how society chooses to satisfy its unlimited wants with its scarce resources."

You see, everything that has a value is limited, or scarce in its supply. That is what gives it value. Take for example a new car. If there were so many new cars just laying around, and I mean so many that people saw them as a nuisance and grew tired of hauling them off like weeds, then a new car would be worth about as much as the weeds. But since they are scarce relative to people's demand for them, they have a value. The same is true for any resource used to make or acquire things. Even money, though it is not a resource in economic terms, is relatively scarce when compared to peoples demand for money to buy stuff.

When any resource is scarce, then a choice has to be made as to how best to use that resource. For consumers, that could be money. However, the availability of easy credit during the last 30 years has meant that people did not have to choose how to spend their money, but rather could buy many of not most of the things they wanted. That is one cause of the economic mess the country is in now- people not wanting to have to choose. Now many households are so far in debt that they are not able to satisfy some of their needs due to the overwhelming debt payments.

I don't mind people wanting things, and even view wants as having a positive effect often times. After all, if you really want something, you will work to attain it. The more you want it, the more you are willing to give up for it and the harder you will work for it. What I have an issue with is people ignoring what they have and only focusing on what they want. My wife and I often joke about this with the expression "it’s that time of year to think about what we don't have."

I feel that there is a slow move away from materialism and the strong desire to have stuff, however it will be some time before we will know if enough momentum will pick up to keep us moving this direction. I hope it does because we need to change the consumption and savings habits in order to assure a strong future for ourselves and our children. I challenge everyone that reads this blog post to start thinking more carefully about every purchase, treating it as if it was the only one you are allowed to make. By doing this, you will find yourself making wiser buying decisions, as well as possibly discovering that you did not want that item as bad as you thought you did. You might even save some money.

Till next time,

Robert