Eduardo Porter: Price can operate in an irrational way

Eduardo Porter: Price can operate in an irrational way

Eduardo Porter: Price can operate in an irrational way 150 150 33Voices


It’s a real pleasure to have Eduardo Porter with us today. I could give you a big bio and a long bio but I’m going just be very brief. You have been a columnist for the New York Times for a long time. More importantly, you’re the author of a very intriguing book, The Price of Everything.

I want to start Eduardo with just a simple question. In your research for this book in particular, tell me the most important thing that you’ve learned about the choices that we make in life.

The most important thing that I have learned is actually how many choices we make without thinking about the underlying calculations of our choices. That we will go in and choose a certain path over another; get married and have children, go to school or not go to school, get a job. All of these decisions ultimately imply cost-benefit calculations. There are prices that are guiding us this way and that.

We often make these decisions as if these prices weren’t there. And we do not evaluate what is it that is really driving our options. For me, the realization that these costs and these benefits are there and that I am processing them in some way, sometimes like below the radar and in an instinctive way. I found that particularly interesting because it gave me a new perspective on why I chose certain things and not certain others.

Let me give you an example, a very trivial small example on how I purchase coffee. When I started to work on this book, I started wondering why is it that some days I’ll buy coffee at Dunkin’ Donuts while other days, I’ll buy coffee upstairs if there is an Elite Café in the building where I work. Sometimes I’ll just buy it from the guy in the corner stand. Sometimes I’ll buy it from near my home. Sometimes near the office.

I’m feeling, what is it that is leading me to purchase this experience in a difference place? What it led me to question is, what is it that I was buying? It was clearly not just coffee. Because for instance, I was willing to pay $3.50 for a coffee right above me instead of going downstairs rather than upstairs and paying $3.02 at the Dunkin’ Donuts.

Clearly, I was choosing something more than the coffee. I was choosing the experience. So if I went upstairs, the Elite Café is kind of like more of a brush feel, more elegant. It has a little bit more of a luxurious feel, nice little chairs. There are also other colleagues from my building that I could meet and have a chat with there. It’s got some beautiful lights. Going downstairs to the Dunkin’ Donuts was kind of like more of an anonymous experience.

So I said, okay, I think I’m just buying coffee but interestingly, I’m actually buying more. I am buying a sense of belonging. If I go to the Starbucks, you know, the idea of sitting with other people looking kind of like in a grungy way and working on their laptops. That might be something pleasurable to me. This is a long winded way of saying sometimes we’re purchasing more than what we think we’re purchasing immediately.