Color of Money: Don't be fooled by the word 'sale'
WASHINGTON -- It's the most wonderful time of the year ... for bargain hunters.
Die-hard discount shoppers started hunting for after-Christmas deals before Santa had a chance to put his reindeer back in the stables.
And even as we enter the new year, the stores will still be crowded. You can hear the shrieks of sale excitement from the parking lots as people rush to snag what didn't sell before Christmas.
But in 2018, I want to challenge you to rethink how you view a sale. Consider this: We have been brainwashed to see a sale as a thrilling event. It's not. We've been bamboozled.
Recently, I invited comedian and behavioral economics advocate Jeff Kreisler to join me for an online discussion about his book, "Dollars and Sense: How We Misthink Money and How to Spend Smarter," which challenges a lot of financial assumptions.
Kreisler and his co-author, behavioral economist Dan Ariely, take on the widely held belief that sales save you money.
"Basically, since it is so hard for us to assess the real value of almost anything, when something is on sale -- when we are presented with a relative valuation -- we take the easy way out and make our decision based upon the sale price," Kreisler and Ariely write.
The authors argue that when we see a sale, we should ignore what the item used to cost. It's irrelevant. Instead, what we should be doing is considering what else we should or could do with the money we might spend on the sale item.
"Think about transactions in terms of opportunity costs by considering more explicitly what we're sacrificing for what we're getting," they write. "Buying a $60 shirt marked down from $100 isn't 'saving $40'; it is spending $60."
During the online chat, one reader remarked that Kreisler's take on sales was a little too radical.