Reflections on the Magnificent Economics of a Day Spent Buying a Bar of Soap - A True Story

Though the only economic transaction in which any currency was spent, the purchase was the least significant transaction of the whole day. If one stops to consider the basis of economics, every moment of every day offers precious gems. 

Trying to remain antifragile and enjoying a change of pace and diverse opportunities, I keep a few plates spinning most of the time. One of the things I really enjoy is to teach economics. Only getting to teach one student here or there helps me focus while also maintaining flexibility. But it's super rewarding to walk a young mind through human activity and witness them gain some freedom from state paradigms that can so easily ensnare us. It's these thoughts that spurred me to write my previous article, Micro, Macro, Socio or Politico, Economics is Boring, Right? Think Again. Don't Let the State (or others) Steal Your Economic Joy.

In this particular case, I had just started teaching a young lady in Italy. I was busy in Chile at the time, so wasn't able to keep up with her as well as I liked. But I tried to send her notes to help her think, which resulted in these thoughts about the economic exchanges we make in everyday life. What follows is a slightly edited version of what I sent her.

I was thinking about you earlier this week as I went to the store. What are all the economics involved? After all, I only needed a bar of soap. 

First, I had to think about how far I wanted to go. It's about a km away. That's not a bad walk, but still an "investment." However, from where I'm staying right now, I have a beautiful view of the beach. Walking along the boardwalk is something I enjoy.

Yet there is the "expense" of walking down 169 stairs on the way down. If you leave where you're staying and walk down stairs, what does that mean? Yep, you'll have to walk back up them. 

Yes, these are the actual stairs. :) 

So I had to weigh the cost and benefits of everything I was doing. Of course, we don't do this with direct focus on the economic transaction. But, ultimately, we don't do anything unless we consider the benefit to outweigh the cost. Can you think of a single example where this is not so?

In addition to all of the above, I needed a shower. That's why I wanted soap. I had been traveling and so busy that sleep had been more important than washing, and I could tell. So I had another motive.

In order to make the most of my investment, I decided I would go walk along the beach, stop at the small plaza in town to check messages on the internet, then go to the store to get soap before heading back up the 169 stairs it would take in order for me to finally get that shower.

Thus, an economic transaction had taken place in my mind. I saw the cost of time and energy to be worth less than the reward and final result.

When I arrived at the store I searched for a bar of soap. Being a man, I didn't necessarily want something that smelled too pretty. I just wanted to get clean. And I'm fairly health conscious, so I wanted something without chemicals that I consider harmful. But I'm also frugal, so I wanted to make sure to find the best deal.

I ultimately found two bars to choose from, but made of glycerin. One had perfume added, the other did not. The former was more expensive than the latter. So, by now, you've probably guessed which one I chose. Even in this, the time invested in making the decision was worth the return (or lack of harmful chemicals) I would receive from the actual decision.

When I took it up to the counter, an exchange was made. The woman behind the counter (or store owner, to be more accurate) considers 890 pesos to be worth more than the soap. I consider the soap to be worth more than 890 pesos. If neither of us thought so, then there would be no sense in such a trade. It would be self-defeating to trade for something I considered of lesser value. In order to help someone, I might. But, even then, the reward of helping them would outweigh the expense, in my mind.

So, I handed the lady the pesos. In turn, she handed me the soap and a receipt. After we finished, we were then both very pleased with transaction. The currency in the cash register had grown more than the amount the store had spent on the soap and I had what I needed to go remove a couple of days of travel off me. :)

After being reminded of how difficult 169 stairs can be, I proceded to reap the benefits I had gained from my investment. The walk along the ocean, the stop at the plaza, the expense at the store and then the trip back up to finally take a shower rewarded me with fresh air, a beautiful view, wonderful sounds and smells and finally with a much more comfortable and clean body. Ahhh, yes, it really was great trade I had made, on every count.

At this moment I find myself in a lounge, waiting for a friend who is getting exercise, while I type away on my tablet. In this particular case, I did not consider bringing my laptop to be worth the investment it would take to have the convenience it offers. And I wasn't sure I would have Wifi, so the investment would have been far from certain. But I also have an alternative, especially since I have a keyboard to accompany my tablet.

Ultimately, at this very moment, I consider the investment in bringing my tablet and communicating with you to be worth the reward. In fact, I consider the reward to be greater than the expenditure of time and effort. This, too, is an economic transaction. All human activity is.

 Rockin' on,
Another Joe

My introduceyourself HERE.