US consumption datapoint of the day

By Felix Salmon
September 5, 2009
Jon Mooallem's very good NYT Magazine article on the self-storage industry:

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From Jon Mooallem’s very good NYT Magazine article on the self-storage industry:

By the early ’90s, American families had, on average, twice as many possessions as they did 25 years earlier. By 2005, according to the Boston College sociologist Juliet B. Schor, the average consumer purchased one new piece of clothing every five and a half days.

That’s an average of 66 clothing purchases per person, per year. I’m sure that the number for men is a lot lower than the number for women, so I fear to think what the number for women is.

Mooallem is also good on explaining how the self-storage industry is essentially a way of monetizing the sunk-cost fallacy. Indeed, the industry itself is happy to admit it:

Clem Tang, a spokesman for Public Storage, explains: “You say, ‘I paid $1,000 for this table a couple of years ago. I’m not getting rid of it, or selling it for 10 bucks at a garage sale. That’s like throwing away $1,000.’ ”

Of course, you really threw away $1,000 when you bought the table. But you probably justified the purchase by considering it an “investment”. Despite the fact that if you’ll never sell something for more than you bought it for, it can never be an investment.

8 comments

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It could still be an investment if the services it provided were worth something like $1000, but it would be hard to believe so. Maybe if it were an antique or collectible.

Posted by Lord | Report as abusive

Except for a small number of things, luxury items don’t retain their value, and really only have value insofar as they confer status. So a new $1000 table may signal status and wealth when you entertain guests. The same table, several years old, may no longer work as a signal of your wealth and taste. A more obvious example is in terms of clothing. It doesn’t matter how much you spent on a suit or dress, if it is out of fashion, it is no longer doing its primary job and is pretty worthless (except in practical terms of covering your nakedness).

Sure, from a purely accounting or financial point of view, it is hard to value a luxury item/status symbol. But to say that someone “threw away” $1000 when they bought an expensive table is to deny that status symbols and luxury brands have value–and in almost any human culture, they do. No one is a pure utilitarian.

>> I’m sure that the number for men is a lot lower than the number for women . . .

Hmmm. You may be surprised, Felix.

Posted by Curmudgeon | Report as abusive

The persistence and pervasiveness of the sunk-cost fallacy has always amazed me. I guess we shouldn’t be surprised at all that some industries have found ways to exploit this.

Can anyone think of a (relatively) simple way of explaining sunk costs so that people can recognize (and respond to) them properly? I’ve always liked the example of driving (say) 200 miles for a major clearance sale that turned out to be less than expected (no harm in just driving home). But even when I use that, people will still argue against it (e.g. But you’ve already driven soooo far!), so I’ve got work to do.

Posted by ab | Report as abusive

Aaron, it’s worse than that: outlet malls, like self-storage, are BASED on the sunk cost fallacy.

Posted by Felix Salmon | Report as abusive

The NYT Magazine article doesn’t link to Schor’s original research, leaving me with the burning question: Is the seven-pack of tube socks I bought last week one item, seven items, or fourteen items?

Posted by Ken | Report as abusive

Just moved. I have never believed in stashing stuff, so moving from a kinda big house to a little apartment loft was an eye-opener. We gave away stuff for weeks before we moved, and then gave away a ton more after we moved. And yet, when all is said and done, we still have a ton of possessions. Hard to say whether we possess them, or they possess us. I still feel a bit haunted by all the baggage. I am learning to go light and tread a bit more softly on the home planet. Too bad it has taken me 60 years to get to this point . . . you harbor a host of other values when raising a family, but when it is time to let go, why stash it in a storage locker only to have to dump/donate it later?

Posted by JD | Report as abusive

Ken beat me to the tube socks bundling issue.

Posted by bdbd | Report as abusive