Quote: (01-28-2014 12:22 PM)Thomas the Rhymer Wrote:
If our purchases are emotions based then why do economists keep trying to fit rational instead of emotional models into the inflation/deflation models? If hoarding of money is such a problem during deflation, and people are emotional beings, surely a good advertising campaign can get people out there and spending?
I'd really like to see the idea that inflation=spending and deflation=hoarding to be tested in the real world. Like maybe take two similar towns and put one in a mildly deflationary environment and the other in a mildly inflationary environment and see what happens. The arguments about inflation always seem to be too much rooted in logic and not in enough in empiricism, and there have been enough mistakes in medicine due to 'logic' to give me a healthy disrespect for arguments that are not based on experimental data.
One thing we all have in common is fear. Fear of loss, fear of making a mistake, fear of failure, etc...
That fear can lead to inaction a lot of times if not most times.
In essence, people are predictable to a certain point. We are talking majority of people.
There are impulse buys but a great deal of purchases have been in their heads for a long time, especially when it comes to higher priced products.
Watching prices on products, checking out reviews, visualizing why you need it, how it will make you feel until you get to the point of actually purchasing it.
One of the hardest things when trying to make a sale is to get them to do it right then and there.
If you're talking about prices for products falling month after month, that fear of making a mistake will kick in and people will sit and wait for the most part.
Buyer's remorse is real and watching the price fall on something you already purchased will trigger that in a big way.
One of my new product lines are programs that I will only put up for sale once or twice a year. I am creating a scarcity so the fear of missing out will make them purchase quickly and for a higher price.
I have had customers who were upset because I sold a software program on a sale even though they purchased 6 months to a year before that sale.
Crazy to me but that is reality.