Economic Add-Ons
A recent article by Marc Hedlund (who writes the Wheaties for Your Wallet blog) covers a paper entitled Consumer Myopia and Information Suppression in Crowded Markets. If you scanned too quickly over that title, think about it once more: it means that when consumers don’t take the time to analyze the full extent of their purchases/services in a given market, then they will get overcharged by companies taking advantage of mis/dis/missing-information.
A good example in the article is printers: if you are aware that you can get cheap off-brand ink, use ink-conserving settings, and avoid printing things like webpage backgrounds, etc. … well, then you are an educated (non myopic) printer consumer. By buying a cheap printer, and avoiding the expensive add-ons the printer companies expect you to buy, you’ve beat their system! Here’s a good quote from the article:
Credit card companies have a name for this kind of educated, sophisticated consumer, one who avoids all the fees credit card companies normally charge. They call consumers like that “deadbeats.” Sounds like someone who doesn’t pay their bills, right? But no — it’s exactly the opposite. A deadbeat is someone who does pay their bills, and thereby avoids late charges and overlimit fees.
Finally, there’s a good point here that you can easily gloss over; it is nevertheless very important… the only person who can educate the consumer without monetary loss is other consumers. Thus, something such as Consumer Reports must be a non-profit if it is to even exist.
Comments
Nils
I try to be those “deadbeat” customers as often as I can. Sometimes I have trouble remembering to send in mail-in rebate checks which is arguably the easiest thing a consumer can do to save hard-earned money. I would be willing to bet that only a very small percentage of consumers are “deadbeats” in the complete sense of the term. It’s a little depressing actually.