The Hardware Man - A Few Principles of Economics
- Editor
- 1 day ago
- 3 min read
Howdy Folks,
As part of our continuing education series, I want to discuss a couple principles of Economics that we all live our lives by intentionally or not. WIIFM and TINSTAAFL are an interesting study of human nature. WIIFM – What’s in it for me. TINSTAAFL – There is no such thing as a free lunch.
We live in a trading economy. Money, time, peace, or health are all available to be traded in exchange for something. As young people, we may trade more time in exchange for money, as we work long hours to get ahead, but maybe with an additional cost of our health. As people age, they prefer to trade that money they have earned for more health, or time alive, or peace of mind.
These forces make us continually calculate each transaction, whether we do it consciously or not. So we introduce the WIIFM principle. The What Is In It For Me principle is as simple as it sounds. It is the tendency to care about a message, a product or a change only when a benefit or value is clear. Why does some advertising compel you to act? Because they can convey a solution to a problem you didn’t know you needed. For example, bottled water wasn’t a thing 30 years ago. Why do I need to buy water in a bottle when the tap water is the same thing? Until some marketing genius decided to tout health benefits of a naturally abundant resource full of essential minerals in a convenient disposable package.
WIIFM creates an emotional attachment to a topic or a product that drives people to action. Action could be a purchase – This kitchen doodad makes cutting veggies easy and is on sale now, only until midnight tonight! Action could be a motivating mental shift – Keep Pennsylvania Beautiful is an anti-littering campaign that has been effective. Financial Guru’s sell common sense dressed up as success and prosperity in simple steps.
To complement the WIIFM principle, you have the skeptic that looks for the caveat. TINSTAAFL, or There Is No Such Thing As A Free Lunch indicates that there is a hidden trade-off or cost of every perceived free benefit. According to legend, the Free Lunch was a sales tactic first used by saloons, offering free salty foods to patrons to spur drink purchases. Nowadays, there are gimmicks, discounts and freebies given online to push a sale or sign up. Our website has an option to enter your email address for a free $5. But the free lunch is paid for by giving up some of your information for marketing purposes.
Other varieties of the Free Lunch include opportunity costs, hidden costs or scarcity. Opportunity Costs consider the trade-off between choices. Grocery and Convenience Stores are expert at this with BOGOs or multiple unit discounts. Or in everyday terms, how much can I get with this money in my pocket? Hidden Costs can build off of Opportunity. A business incurs hidden labor costs when an employee can’t work efficiently or has to run to get materials due to inaccurate ordering. Scarcity can impact perceived demand and shift purchasing priorities which may put off other buying opportunities. Remember COVID panic buying?
I sure hope we never have a market disruption like that again. Supply, Demand, Scarcity and inflation to the n-th degree.
With our world constantly subject to some of these economic forces, it is good to learn a little more about what affects us in business, personal life and society. Let’s talk inflation next week, shall we?
Daniel Karns and his wife own Clintonville Hardware & Rental along with other businesses. Join the discussion by contacting him at info@clintonvillehardware.com.
