Wednesday, July 27, 2005

Am I a consumerist? 

Doc Palmer thinks he spends too much money, perhaps because of low interest rates. He's developed a quiz to test me.
  1. How many books have you bought but not read (yet)? It depends. Some books I buy are for reference; I know I'll need them some day for my research -- books on central banks, or econometrics, for example -- but they might sit for months before I use them. If that was included, you could be looking at 40 or so. If it's simply books I intend to read sitting in the pile behind my recliner, that pile has 11 books right now.
  2. How many unopened CDs do you have? 6. I just looked. Since I buy online and get volume and shipping discounts, I think this makes sense. I play one CD over and over until I feel the need to open the next.
  3. How many times have you bought a book or CD, only to discover you already own it? Three times -- two CDs and one book. One was intentional to have the CD both at home and in my car.
  4. How many unopened DVDs do you have? None. I really don't buy many DVDs, owning maybe ten.
  5. How many tools or appliances have you bought in case you might "need" them and not used yet? Traditional tools? I'm of the Red Green school of repair -- I only own duct tape. Even that, I don't use much. I just go buy a replacement. Appliances for the house, no, because Mrs. S is adamant about not having clutter. Extra computer stuff, OTOH, I'm bad. A closet full.
Think about, however, whether this is economically rational. As David Altig points out here, the flipside of corporations being slow to invest out of retained earnings in this phase of expansion has been that business savings in America is up. This additional savings might be keeping interest rates low and generating investment in real assets. Those traditionally are houses and land, and precious metals and jewels, etc. But these items John describes above also items that do not lose value over time. I recently found in a drawer a CD I must have bought years before; if anything, opening and playing it now has been even more enjoyable.

If real interest rates are low, purchasing assets or even consumer goods with little depreciation even when used seems to make some sense.