When something costs $100, but is 40% off, buying it makes you $40. I had this discussion with my secretary. As G-d as my witness, this is absolutely true. Women think in a different dimension than men do.
My sister (RIP) had this attitude 30 years ago. She’d buy something she didn’t need, or even knew that she wanted. “But it was 50% off - how could I NOT buy it!?”
My daughter rents a place with an okay fridge included. She works at a store and they had a display model fridge they were trying to get rid of. It was on the small side, but about the same size as her fridge in the rental. Brand new it was $800 or something. It was down at $300 and she wondered if she should buy it. I told her it would be more hassle than it was worth when she moved some day.
After a few more weeks it was down to $50! She was REALLY tempted to buy it, but didn’t. If I thought she would have the inclination to sell it at a profit I would have told her to buy it.
But she doesn’t have the inclination, and if it won’t sell for more than $50 at a box store she probably wouldn’t be able to sell it for much more than that out of her garage.
Oh. And it was red.
Now that I read the article my wife uses “girl math” when it comes to gift cards for restaurants.
We’ll go to our normal restaurant with a $50 gift card from somebody. Instead of it covering a regular meal for us (with some left over) she’ll get the better cut of steak, appetizers, better wine and more glasses, etc.
Bill comes out to $90. “But with the gift card its the same as if we just ate our regular meal!”
And then on the way home she’ll complain about how she ate too much!
We don’t go out that often though, so I have learned to indulge her. And I guess that is the point of a “gift” - it’s to be a bit special, rather than just covering the costs of typical expenses.
Liability insurance is similar. For example, suppose I am hit by a car and suffer serious injuries. I sue the driver for $2 million. The insurance company, after evaluating the claim, sets aside $1.5 million in reserves to cover the potential loss. The case then settles for $1 million. Using "insurance company math," the insurance company made $500,000.
There’s an old saying to the effect that a man will pay $20 for a $10 item he needs, and a woman will pay $10 for a $20 item she doesn’t need.