TOPICS > Economy

Bargain-hunting Adds Up to Unexpected Costs

August 10, 2009 at 2:34 PM EDT
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In the new book "Cheap: The High Cost of Discount Culture," author Ellen Ruppel Shell explores modern consumers' love of cheap, mass-produced products, and the downsides -- on wages, the environment, and quality -- that a discount culture creates.
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JIM LEHRER: Next tonight, NewsHour economics correspondent Paul Solman has a conversation about the pursuit of a good deal. It’s part of his series “Making Sense.”

ELLEN RUPPEL SHELL, author, “Cheap”: You see what the sign says? It’s, “We’ve got to have it.” Now, why do we have to have it?

PAUL SOLMAN, NewsHour economics correspondent: Author Ellen Shell, whose much-discussed new book, “Cheap,” blasts the high cost of discount culture.

ELLEN RUPPEL SHELL: What is it about these particular shorts and these particular shirts that we’ve got to have? We’re compelled to buy these things, mostly by the price.

PAUL SOLMAN: We’re compelled by marketers, says Shell, who understand how human nature and the brain that embodies it evolved, our love of bargains bred in the bone.

ELLEN RUPPEL SHELL: Brain scientists have shown that a good deal triggers the pleasure centers of the brain in almost all of us to such an extent that it obliterates a more reasonable, rational side.

In the case of bargain-hunting, the anticipation of owning something for very low price is what triggers the biggest reaction, the biggest pleasure sensations in the brain. It’s not the actual owning of the object, OK?

PAUL SOLMAN: Shell thinks the brain we hunter-gatherers were graced with when we stopped evolving many millennia ago feels bad when it passes up a bargain.

ELLEN RUPPEL SHELL: What we want to avoid in life is regret. We hate regret.

PAUL SOLMAN: For good reason, she says.

ELLEN RUPPEL SHELL: When you’re talking about regret, I mean, if we’re going to speculate about early man, OK, mistakes in those days could be very, very bad. You know, for example, if you missed the opportunity to run down that elk, you may starve to death, OK? There were reasons why you would regret not taking action.

PAUL SOLMAN: A hundred and fifty thousand years later, the fear of not carpe-ing the diem might sucker us into buying window gel clings for only $2.99. Such a deal.

ELLEN RUPPEL SHELL: So it’s $2.99 for something that you probably wouldn’t even pick up off the beach if it kind of came in with the tide.

PAUL SOLMAN: But it’s pretty. I mean, it’s going to be nice on my grandchildren’s window.

ELLEN RUPPEL SHELL: Yes, and if you wanted — if you come in deliberately to buy window gel clings, I say go for it.

The hidden costs of impulse buys

PAUL SOLMAN: But if you're buying on impulse, says Shell, think twice.

ELLEN RUPPEL SHELL: Well, we've loaded up on this sort of stuff, not just you, but all of us, because one of the largest growing industries in the last 20 years has been storage units. We've bought so many of these things that we now rent space to store it, our window gel clings and things of that nature, in separate storage units for which we pay rent.

PAUL SOLMAN: Shell knows whereof she writes.

ELLEN RUPPEL SHELL: I used to do this. I used to walk into a Target, and I was the biggest, you know, victim, chump.

PAUL SOLMAN: Because it's a discount store.

ELLEN RUPPEL SHELL: We assume everything is a great deal, but this candle is being sold for $24.99.

PAUL SOLMAN: $24.99. Yes, let's see.

ELLEN RUPPEL SHELL: How much should a candle cost, do you think? Do you have any idea?

PAUL SOLMAN: Well, not this much, unless we're experiencing hyper-inflation, but $24.99?

ELLEN RUPPEL SHELL: The old canard of using 99 cents to attract us, now you'd think, "Gosh, we know that trick. We know that trick."

PAUL SOLMAN: But are vulnerable to it nonetheless.

ELLEN RUPPEL SHELL: If you think we're not suckers for this, you have to ask why they're constantly using the 99 cents or the 49 cents.

PAUL SOLMAN: No, this is on sale.

ELLEN RUPPEL SHELL: That's right. And that temporary price cut gives us urgency, so now we need to stock up on these candles.

PAUL SOLMAN: So how do we resist? Think, says Shell, about the costs of your impulse purchases to yourself and to others. Shrimp, for instance, once a luxury, now cheap, because it's farmed in Thailand. Unfortunately...

ELLEN RUPPEL SHELL: They had this wonderful ecosystem which was built around mangroves, a kind of tree with these enormous roots, that is on the coastline, runs all the way down Thailand, is very important for shrimp, and it's also important for fish, and it's also a protective barrier in case of typhoons.

Well, those mangroves were ripped up to make way for shrimp pods. And these shrimp pods are so crowded and filthy, they dump tons of antibiotics and other kind of pharmaceuticals onto these shrimp and they are able to produce them extremely cheaply. And this is why you can go to cheap restaurants or low-price restaurants and get all the shrimp you want for $15 bucks.

The case for low prices

PAUL SOLMAN: Meanwhile, Shell insists, Thailand suffers. But wait a second, says the economics reporter.

That's always a problem whenever there's technological progress of any sort, the pollution from steam engines or, you know, from electricity plants and so forth. But that -- what do you want to do, turn back the clock?

ELLEN RUPPEL SHELL: No, but I think it's within people's rights to know where their food comes from and how it's being harvested and how it's being grown. And I don't think a lot of us are informed or the manufacturers or distributors would want us to know how this shrimp is farmed in Asia.

PAUL SOLMAN: Or how the wood for cheap furniture here or at Ikea, say, is illegally harvested in the far east, poached, she says, by Russian mobsters, or how the quest for ever-cheaper labor to make toilet seat covers here or at Wal-Mart has forced wages and benefits down in the U.S.

But, surely, Shell knows there's an economic case to be made for low prices.

Isn't there a tremendous advantage to mass production, mass distribution, and discount stores like this that make things more widely available in an egalitarian way?

ELLEN RUPPEL SHELL: Look, mass production has been part of the American way since the turn of the century, very much a part of the American way. And we're not going to turn the clock back on that, nor am I suggesting that we do.

Ultimately, we're spending more on consumer goods than we did 10 years ago, 20 years ago, as the prices of these goods get lower and lower. And many of us are filled with remorse when we come home with our discount purchases and find that they're not actually what we set out to buy.

PAUL SOLMAN: Shell spent three years writing this book and retraining her brain. The advice for those who have less time and writing talent when next walking down the aisles?

ELLEN RUPPEL SHELL: That they walk around the store, maybe get a cup of coffee, give themselves a break, and try and project into the future. It's much more easy to think rationally about the future than it is to think rationally about the present.

PAUL SOLMAN: Although, let's face it, thinking rationally about the future isn't that easy, either, something to keep in mind the next time we're enticed by an offer we can't refuse.

But it's pretty!

JIM LEHRER: On our Web site, Ellen Ruppel Shell will be answering your questions on the true cost of cheap goods. To participate, just go to newshour.pbs.org.