Penny wise, pound foolish

Following up on the psychological tactics used by casinos, it is amazing how the "out of sight, out of mind" phenomenon applies to money. Retirement planning, "paper" gains or losses, even credit cards appear to be little more than vague concepts to many people. Yet people will count the pennies if they shine within reach. We'll unit price at the supermarket, wait in line for gas that is a nickel a gallon cheaper, and use coupons and pounce on sales. There's nothing wrong with that, but we're much better at seeing trees than forests. I remember having a yard sale some years ago and having a guy haggle for quarter when he started chuckling, realizing that he had just lost $600 at the casino the night before and now found himself considering whether to buy or not over twenty-five cents (that's more about "winning," I suspect, but we'll take that one up at another time).

I heard a story once about a rich guy that was shopping for shirts and found himself torn between two shirts, priced a few dollars apart, trying to assess "value" in terms of whether the more expensive shirt merited the extra expense. After he made his decision he was curious about his decision process and computed that the time he took trying to decide between the shirts was worth more than the price of the shirts themselves, and from that day on when faced with such a dilemma, he just bought both options as it was cheaper for him to do so.

I don't know whether that tale is apocryphal, but I suspect that most of us will not find it cheaper to buy both rather than spend time deciding. What is clear is that not only is our time worth something, but that we spend a disproportionate amount of time focused on the relatively small, tangible, and immediate rather than the larger, less tangible, more distant issues. While monetary behaviors are the example, the principle really applies to many aspects of our lives, of course. There are lots or reasons for that, but not much reason.