Dollars and Sense

Money works the same way. It isn’t the final goal in life, it’s a means to an end. But because money is much more tangible than happiness, well-being, and purpose, we tend to focus our decision-making on money instead of on our ultimate, more meaningful goals.

Paying for things while we consume them not only makes us more acutely aware of the pain of paying, but it also diminishes the pleasure of consuming.

The words describing something and what we do at the time of consumption (language and rituals) How we anticipate the consumption experience, rather than what its true nature is (expectations)

We are willing to pay more when we see the costs of production, people running around, the effort involved. We implicitly assume that something labor-intensive is worth more than something that isn’t.

In both cases, we don’t look at the true, absolute value presented to us: $20 for a five-minute drive. Instead, we consider $20 compared to $60 and to $1,060 respectively. We compare the relative advantage of $40 shoes to $60 shoes, and decide the money is worth the time. Then we compare the relative advantage of a $1,040 patio set to a $1,060 one

When it comes to large, complex purchases, we can try to segregate our spending.

When we pay before we consume something, it reduces the pain we feel at the time of consumption.

This is where expertise, knowledge, and experience matter, but these are also the exact same things we fail to value, we lose sight of, when we make value judgments based primarily on effort.

Fairness is a function of effort and effort is shown through transparency.