Thursday, May 07, 2015

The price and value of deprivation

Price is what you pay for and value is what you get. Usually this is applied for things that you purchase. But I guess it's equally applicable to things that we choose not to purchase.

If we choose not to buy something for $10, then we would have saved that $10. That's the price we had saved. But did we also correspondingly lost $10 worth of value? Rationally, we should choose to deprive ourselves of something if we can lose a value much lesser than the price of the goods or services that it costs. However, just like when we purchase things and we tend only to look at the price, we also NOT purchase something by only looking at the price, and not the value of the goods that we cannot enjoy.

Let me some examples. In my crazy 50k saving days, I used to scrimp and save on food. I would choose not to eat even when I'm hungry just to save a few dollars. Or, I'll buy low quality food that isn't healthy but is cheap. The price I've saved from not buying better quality food is perhaps a few dollars, but the value I lost is definitely more than the price I saved. Who knows what kind of long term health effects I could get from this? How about shoes? I used to buy cheap-skate shoes that wouldn't last me 1 month. Compared to a better quality branded shoes that cost up to $150 a pair, I might have saved $100 or more dollars. But the value I lost from not purchasing a better pair of shoes and not enjoying them, and even have to keep hunting for a pair constantly, is much more than $100.

Is it worth it?

That depends on where you are in your life stage. When your human asset is low, you have plenty of time and energy but likely have very little money. So, we don't mind going all the way out to save that few dollars. Of course it's worth it to save a few dollars. But when our human asset is built up to a point where we would rather spend money to save energy and time - those two most important and finite things that each of us have, then it's definitely not worth it.

Having said that, do know that while price is uniform, the value that we derive from the same goods and services is different for different people. To a foodie, spending $120++ a meal on an atas Japanese Omakase is a experience well worth the price. The value derived for that foodie is much more than the price of $120 paid. To deprive that joy of eating that meal can save him $120, but he correspondingly lost much more than $120 (If he eats Sucky Sushi, he will lose perhaps $10,000!). To a person who neither appreciates nor care about authentic Japanese cuisine, eating a $120 or a $10 Japanese meal makes no difference. It might not be worth it to spend that money.

So, spend on things you truly enjoy, regardless of how other people think. You are not others, and the value you lost by depriving yourself of something, just to save the price of paying for them, is not worth it, at least to you.

My friend Rolf will said this very aptly - Know yourself.


Sillyinvestor said...


The law of opportunity costs and trade-offs.

Price is objective, value is not. 150 dollars is 150 dollars but how to determine worth it? Usually it is by "shiok" factor.

If the shiok factor last very long, maybe it is quite worth it. If after that 120 dollars meal, you start thinking of the opportinity cost of compounding loss. Then ...

Food, if not regularly Indulged, doesn't really hurt. Regularly is again a value statement. Is weekly regular?

But I do feel the pinch every time my family ask for overseas trip. It is usually one Lot of OcBC. Lol

Createwealth8888 said...

Definitely good one on food.

Most of us don't bother to think about our taste on food we like to enjoy. Ask those who have lost their taste on food during their Radiotherapy treatment and how they think about food now?

How many of them are still thinking on saving a few $ to avoid eating their favorite meals?

Now, when I smell of oats, I want to "vomit". Those days when everyday meal was just oat. :-(

Singapore Man of Leisure said...


I remember when you were blogging about your 50K challenge and thinking this is not sustainable...

At best you die a rich man with lots of money; but a poor man when it comes to life experiences.

I guess we have to experience the swings of the pendulum both ways to know what's our equilibrium and middle way :)

Know ourselves instead!

la papillion said...

Hi SI,

Price is objective, value is not - couldn't have said it better :)

I had not been to a food court for ages, though I always eat at the wet market/coffee shops near my place. Food court pricing is crazy and is not value for money. Not value lost in saving the money from not eating there. I usually eat at restaurants when I go out with my wife. But we always share portions. 1 portion, share between us. It's sweet - she's on diet perpetually and I don't want to eat so much anyway. I find this a good balance, because the value from sharing a meal at a pricey restaurant is much much more than the price I paid.

Hmm, overseas trip...we are not travel bugs. So occasionally going overseas is very fine for me. If it's every half a year to a trip to Europe? Nah...see until sian haha

la papillion said...

Hi bro8888,

It's really an experience eating our favourite food eh? I'm take your advice and remind myself not to deprive myself from food :)

la papillion said...


Yes, those are the days :)

The funny thing is that now I'm also saving 50k, but the quality of that savings is so different. $1 saved can have so different value when we have different mindsets!

These days, I spend accordingly to what brings me the most joy. In the past, I save money indiscriminately, and that's why it's not sustainable! Everything also cut cut cut, regardless of whether I really need it or not.

So you're right. Only when we know the limits can we walk the moderate middle way :)

Rolf Suey said...

Hi LP,

Money is elusive when I am young. Very poor! Strangely, I already started to go for value. I remember I have a table tennis bat that cost $50 and a badminton racket that cost $100 in late 80s to 90. I bought those with my own savings over some time/Ang pow and a money award that my principal give to me, for rep the school.

It has not changed thru out 20 over yrs as I still look at value more than price. Not that I am rich thru out, but I am a fussy guy. It's not easy for me to find things I really like, but once I found it, I really want to own it!

Once I own it, I want to use it immediately and as frequently as possible, Depreciation per day is Lower which means better value.

Eg if a Rolex watch. I prefer to wear it everyday. But I know many people prefer to keep it in closet and only use it on special occasions!

People who do not noe me always say I anyhow spend on expensive things, but in fact my wife noe that I am so spendthrift and only seldom buy a lot of unnecessary things. once I buy it, I make sure I really like it and use it often for a long long time!


la papillion said...

Hi Rolf,

Haha, thanks for sharing your story with us!

I used to be like those pple where they buy new things and use it once a while. That's such a scarcity mindset! These days I follow your style - use it often and frequently. I seldom buy things but if I like it, I'll do it :)

I feel more balanced this way :)