What Cheap Stuff Really Costs Us

What Cheap Stuff Really Costs Us

At the dawn of the 21st century America is, if nothing else, the land of the bargain. Big box stores
like Wal-Mart dominate the retail landscape, peddling middling goods at
rock-bottom prices. Higher-end stores put their merchandise on sale like
clockwork; if you wait a little longer, you can get it even cheaper at a
factory outlet. Afterwards, you can fill up on all-you-can-eat shrimp at
Red Lobster for $15 — truly, the American dream.

But Boston University professor Ellen Ruppel Shell argues that the allure of low
prices are leading us astray: in their bid to drive down costs, big-box
stores have keep salaries and benefits of their millions of employees
to a bare minimum; fashion retailers have prioritized price over style
and quality, often using their outlet stores to hawk a completely
different line of merchandise. Finally, what kind of bottomless
plate of scampi do you really think 15 bucks can buy In her new book, Cheap: The High Cost of Discount Culture, Shell argues that our nevernding pursuit of cheap has blighted our industrial
landscape, depressed working wages and contributed to the global
financial meltdown. Shell talked to TIME about the problem with bargain
goods, how to stop yourself from buying something you don’t need and why
Ikea is the least sustainable company on the planet.

So what’s wrong with cheap, in a nutshell

Well, in a nutshell, it comes back to bite us in the ass. It’s
short-term gratification and long-term pain. Now, I’m a rabid bargain
hunter. Ask my kids. When I come back from the store and I have four
boxes of cereal, they know that cereal is on sale. I’m what behavioral
psychologists call “deal prone.” And yet I noticed this wasn’t really
saving me any money — in fact it was costing me money. I went and
looked at the data and found that since the 1970s we are spending less
for clothes, food and appliances and substantially less for owning and
maintaining a car. But at the same time, our spending has increased,
controlling for inflation, by over $4,500. And a good deal of that has
to due with price.

You talk in the book about a drug study
where they administered painkillers, and when they told patients the
drugs had been bought at discount they were actually less effective.
That’s kind of terrifying.

The response to a discount is profound in the human brain. What is less
profound is the response to actually owning that object once you get the
discount. We strive to get that deal, but we tend to devalue the object
after we purchase it. For many things the biggest charge we get is it
that transaction itself. Retailers and marketers strive to make us think
we are scoring good deals. They make you think that you’re special
because you’ve been able to score this deal. But you need think,
really: Why are you so smart that you’re not paying the so-called full
price And in fact you need to look carefully, because many times you

That was another thing you discuss in the book: unrealistically high
reference prices. They’ll put this price tag on an item that’s
ridiculous for what its actually worth to make you think you’ve gotten a
good deal when it’s marked down.

No one ever pays full price for a mattress. There’s actually been a lot
of litigation around mattress prices, because they set those reference
prices very high to make you think that you’re getting a good deal. In
fact often a department store will put one mattress on so-called “sale”,
and raise the prices of the other mattresses so it makes it seem that
that mattress is cheap. The only mattress they really expect to sell is
that mattress on sale.

You also say that factory outlets may be not really a bargain at
all — that you’re not really buying a Banana Republic shirt at a cheaper
price, you’re just getting something else.

That’s absolutely right, and for me that raises really interesting
philosophical issues: when is a brand really a brand What does it mean
to be a Coach bag What does it mean to be North Face parka These
companies manufacture things specifically for their outlet stores and
they rely on their brand to carry that signal of value. So you have to
think about that: If you like this object, whatever it is, if it seems
to suit you or fit your needs and appears to be good quality or good
value for price, then go ahead and buy it. But don’t buy it because
you’re motivated by the brand and think your getting a good deal.

You argue in your book that the so-called “Age of Cheap” is

Right. It’s a short term fix. I talk about Ikea being the least
sustainable company on the planet. That’s a quote, I didn’t say that.
But the reason is that they rely on consumers to carry huge costs for
the company.

In their defense, they seem like very nice people.

They are. The Ikea people I met in Sweden are the nicest people you can
imagine, but they were also like a cult. Their allegiance to Ikea was
just beyond belief, to the point where they weren’t really thinking
about what their day-to-day activities meant. They design to price: they
set the price first, and then do what they need to do to keep the price
where it is. So whether it’s a 50 cent coffee mug or a $100 table, they
do what they need to do to keep the price at that point. So if that
means buying wood from eastern Russia, with its questionable timbering
practices, hauling it over the border to China, with its questionable
labor practices, to produce furniture for American consumer, that’s what
they’ll do.

You write about how working on the book has changed the way you shop.
Are you spending less, now that you’re not focused on buying stuff just
because it’s on sale

I absolutely am. It’s incredible. I bought mulch, just last week, from
my local hardware store. It’s more expensive than going to Home Depot,
where I used to get it, but the guy there could direct me to exactly the
type of mulch I wanted, he carried it to my car, it’s much closer and I
got exactly what I wanted in the right amount. So the satisfaction I got
was not in the price, which was higher than I normally pay, but from the
stuff. That’s a switch.

It seems like if this cycle is going to be broken it’s going to require
changing people’s behavior on a really large scale.

The first thing I suggest is, when you see something and you’re
motivated by price — and we all are — you walk away. Take a walk around the
store and think about it. Freud said there are two parts of our thinking
system. The primary process is the impulsive, playful,
I’ve-gotta-have-it-now side, the second is the more thoughtful
contemplative side. Get that secondary process going. Think about why
you want this object — this particular mp3 player, this particular
screwdriver. Is this really going to do the job for you And you know if
people start thinking that way, I think it can have big impact.

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