The Free Things in Life Are Not Always Best
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I've become obsessed with getting free things.
It's one of my methods of saving money. I'll take free samples at cosmetics counters. I'll take free books from the laundry room where people leave things they don't want anymore. But sometimes I ask myself: Do I really need to add another book to my already large collection? I mean, I haven't even read all the books I own.
Recently, I came across a paper co-written by Nina Mazar, an assistant professor of marketing at the Joseph L. Rotman School of Management at the University of Toronto. She and two co-writers -- Kristina Shampanier of the Massachusetts Institute of Technology and Dan Ariely of Duke University -- tried to figure out the true value of free products.
When faced with the choice of several products, people will normally subtract the cost from the benefit. "This will decide whether I buy the product and how much I will like it," Mazar said.
Yet decisions about free products differ, she said. People don't figure out what the net benefit is. Instead, they immediately assume that the benefit of the free product is higher even if it is not.
"It seems that when there is something for free it not only manipulates the cost side and reduces the cost, instead it actually seems to increase the intrinsic value that we get from that product," Mazar said.
It's funny how figuring out our finances requires not just an understanding of math but of psychology.
The next time you or I grab something for free, let's think about whether we actually need it.
-- Nancy Trejos
