False economies in the NYTimes

Another CPP-inspired post.

CPP pointed us to this post in the NYTimes written by statistician Nate Silver.  In it, Mr. Silver points out that even though they charge you the same amount for everything at the salad bar, some things naturally cost more by weight than other things, if you were to buy them separately.

I’ve seen articles like this before, but generally they’re focused on when you should buy things at the salad bar pre-chopped vs. when you should buy them whole in the produce/etc. section and chop them yourself.  It has to do with how much do you need, and if you only need a little, or if the processing time is a pain, then you can just hit the salad bar, get what you need, and not have a bunch of whatever it was leftover that you have no idea what to do with and eventually let go to waste.  A nice little reminder, when you only need a little bit of chopped beet and don’t want to have to cook an entire beet yourself.

That’s not what this article is about though.  The article says, hey, you should get your money’s worth at the salad bar.  Load on the expensive stuff and don’t get the cheap stuff.  It’s like the advice at an all you can eat buffet to lay off the bread and eat lots of crab-legs.  (Even though crab legs are gross.)

This advice is actually bad advice.  It is not utility maximizing.  It is statistically money making, but it forgets to take into account people’s utility functions.  It is ignoring the economics.

If you’re not willing to chop those things up yourself, then it is irrelevant what their cost per pound is outside the salad bar. All that matters is the utility you get from each thing. Get the salad you want, not the most expensive salad on the menu. As CPP says, ‘Would Silver choke down a huge plate of sun-dried tomatoes even if he hates them just because that’s the “best deal”? (Actually, I know some “optimizer” statistics dweebs like Silver, and he probably would, and enjoy it.)’

I figured this false economy out in high school the hard way.  The Subway sandwich shop across the street would have an “any 6 inch for $1.99” deal from 3-5 on Thursdays or something like that.  So the seafood sandwich was the same price as the turkey was the same price as the veggie, despite their big cost differences all other times of the week.  I would get the seafood because it was the most expensive without the special.  Yet it never made me as happy as the cheap turkey round I would get on the days when things weren’t on sale.  I was getting the best “deal,” but not what actually maximized my happiness.  I just don’t like fake crab all that much.  Or exuberant mayonnaise sauces.  Eventually I settled on the roast beef (3rd most expensive) on Thursdays and various turkey/chicken rounds other times.  I was “saving” less money, but really, since I wouldn’t have picked seafood anyway the fact that seafood was the most expensive was irrelevant.

Now, if you’re willing to pick up some of the salad ingredients from the produce section and clean and chop them yourself, then it makes sense to know the relative prices at the salad bar, but you also have to compare them to the non-salad bar prices to get the full optimization picture.  The additional choices at the salad bar should make you better off with a better salad, not worse off with a salad you didn’t really want.

If you use both the salad bar and the regular produce section you may end up spending less, having more stuff leftover, but you’ll still have the optimal salad for your purposes.  You’re not deviating from your perfect salad because of the comparative price differences at the salad bar, you’re just getting to it a different way than you would without the salad bar option.  And you’re not ending up with a plate full of nothing but sun dried tomatoes and bacon bits.  (Yum.)

31 Responses to “False economies in the NYTimes”

  1. Comrade PhysioProf Says:

    Actually, crab legs are f***en delicious, just not the ones they offer at all-you-can-eat buffets.

  2. Little House Says:

    I have to agree with you, crab legs are kind of gross. I much prefer the cheaper turkey!

  3. Kathryn C Says:

    We make decisions based on relativity. It’s the same reason why we’ll buy a super sized large drink at the movies — it only costs 10 cents more than the medium, but it’s the size of a house, I’m in!!!

    We start comparing prices and think that we need the super sized soda because it’s only 10 cents more, but we’re getting 2x as much soda. We lose track of what we *really want* once we start looking at relative prices and comparing.

    I try to pay attention to my utility function so I don’t get sucker punched into getting stuff I don’t really want, even though it’s relatively cheap. I’m cheap when I want to be cheap, and that’s that. And, I like fake and real crab meat, lite mayo.

    • nicoleandmaggie Says:

      Movie food is totally wacked out.

      • Debbie M Says:

        All restaurant food. It’s to the point where you have to get the kiddie size to get a decent amount of food for a small grown-up who doesn’t exercise enough (me). I heard a story of someone who’s waiter noticed that most of the food was still left on the plate and so asked if anything was wrong. No, the diner explained, it’s just that it was enough for a family of four.

      • nicoleandmaggie Says:

        That’s the truth.

      • nicoleandmaggie Says:

        Dude, that’s what doggy bags are for. The food is way cheaper when it’s 2-3 meals worth. I love leftovers! I never order off the kids’ menu.

  4. Linda Says:

    Yeah, false economies if one doesn’t care for or perhaps have a plan for the “expensive” stuff. I’ve bought things at the local WF salad bar simply because I didn’t want to buy a larger amount of the same item. I’ve also bought stuff off the salad bar because it is a better value. (For some reason, the same tuna salad on the salad bar is cheaper @7.99 a lb than the stuff at the deli counter a few steps away @9.99 a lb. Only difference seems to be in the container the salad is in.)

    Having just put a full container of baby arugula in the compost pile this message is pretty vivid to me now. I lost $3.50 by buying this on-sale container and letting it go to waste in the fridge because I didn’t have a plan for it. In previous years I wouldn’t feel quite so bad because I could feed it to my hens now that its past prime, and get some fresh eggs in return. But I’m on hiatus from hen-tending now and so it must just go into the compost pile. :-(

    • nicoleandmaggie Says:

      Exactly on the salad bar stuff.

      Compost is better than nothing! When we buy odds and ends, I try to make something that uses up odds and ends like stirfry, omelet, stew etc. Of course, I don’t like arugula much in general…

  5. Renee in BC Says:

    Well stated. Value can’t be assigned by others. If you don’t want it, don’t get it. Period.

    I need to remember this more often.

  6. Dr. O Says:

    This reminds me of a comedian I heard on the radio a few weeks back, regarding the differences between men and women. A woman buys a dress at the store that normally costs $200, but is on sale for $100. Her husband gets upset about the fact that she “spent” $100, but the wife explains that he’s wrong – she saved $100.

    More on topic, Hubby and I love CostCo, but constantly have to remind ourselves of the false economies that type of place exposes us to.

    • nicoleandmaggie Says:

      I hear so many stories of people spending hundreds and hundreds of dollars at those kinds of stores (Costco, Walmart, Sam’s Club). I guess their business model works?

      • Renee in BC Says:

        Costco’s the worst. I’m horrified to think how much we’ve spent there over the years.

        Also, it’s a doubly false economy here in Canada. As in States, the quantities are often too large for reasonable home use, but the prices are much higher here. Costco is slightly cheaper than other local stores, but nowhere near the “value” it is in the States.

        To add insult to injury, Canadian Costco doesn’t sell wine. Bah!

      • nicoleandmaggie Says:

        I’ve never had a Costco card of my own, but when I’ve been there I always feel a bit overwhelmed and never get anything for myself. (Just stick to what’s on the list of whatever group I’m buying for.) Which is odd because generally I love shopping at grocery stores.

      • Tara Says:

        When I moved out from my parents’ house, Costco was super useful. I stocked up on all the things that make sense to buy in bulk: dry pasta, toilet paper, kleenex, paper towels, electric toothbrush heads, etc. I occasionally get my mom to pick me stuff up from Costco now, but mostly I just stock up as I run out instead of going back there – I’m still working on the toilet paper and kleenex boxes I bought there last February!

      • Debbie M Says:

        I only buy things that I know are cheaper and that I will use and that I think will save well. Or it’s the same price as what I usually get, but with some of the processing done. I learned that the sliced almonds freeze well; the sliced cheddar, not so well.

  7. Donna Freedman Says:

    Ever-so-slightly OT, but I must share my father’s rule for pay-one-price buffets: “Never eat anything you can afford to eat at home.”
    Thus you skip the Jello salad and go straight for the shrimp. Or the crab legs.

    • nicoleandmaggie Says:

      My father has the same rule. But if you don’t like shrimp or crab legs and they have really good bread at the buffet… it’s silly to force yourself to eat what you don’t like just because it’s more expensive. (As my partner, who likes bread quite a bit, explained to me early in our relationship.)

      I do tend to follow my father’s other rule of eating meals out (that I like) that I can’t get at home, generally because they’re a pain to prepare (like multi-ingredient salads) or they have exotic ingredients. But sometimes I just want a steak and potatoes and that’s that.

  8. Debbie M Says:

    I agree–it’s better to look at your own value. I look not only at what I like and what things cost, but what’s healthier, and what I don’t already have a (probably) better recipe for at home. So at the buffet last night, I did get rice (cheap, but yum!) but also the Mongolian barbecue stuff (yummy, healthy, never make it at home). I did not get the pizza (it looked like one of the better frozen pizzas) or any of the desserts (which didn’t look that great compared to what I can make, even though normally I prefer dessert over grilled meat and veggies).

  9. First Gen American Says:

    I’m much better off getting lettuce for tacos off the salad bar than I am buying a head and throwing it out. I just don’t like iceberg in salads, so it never gets used. ‘

    I agree with the bj’s costco analysis. So easy to go in there and spend hundreds in one swoop. I don’t have one near me so it’s a non issue, but it’s certainly not worth the drive.

  10. Squirrelers Says:

    To your Subway example, I have bought subs with similar deals going on, and have bought the Veggie. I could have gone for a more expensive sub, since all were the same price, but I bought the Veggie – the cheapest one.

    Thing is, while it’s the one that sounded best to me, I walked away thinking I had made a mistake. As if I missed out on some kind of opportunity. Obvioulsy, rational thought prevailed but that desire for a “deal” was still present. Only that part wasn’t rational, as you described it. I think you get what I’m trying to say :)

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