How You Decide If Something Is Expensive

"Human beings are fascinating creatures. Our belief in our own rationality is patently absurd. Poker players will tell you that if you can't spot the sucker at the table, it's probably you. Similarly, it's obvious when someone else is a hypocrite, yet we are usually blind to our own blindness. What qualifies in our minds when our mouths pronounce the word "expensive" shifts with every purchase."

"Behavioral economists such as Daniel Kahneman, Amos Tversky, Richard Thaler, and Dan Ariely have documented the foibles of human financial reasoning: we judge prices by comparing them with hidden benchmarks and creating contextual stories that we tell ourselves. Let's talk about our annual iPhone rituals: we upgrade perfectly good iPhones for indiscernible speed improvement and marginally better photos, justifying the trade-in cost in terms of supposed higher individual productivity."

Human judgment of expense shifts with context, urgency, upbringing, and subconscious financial anchors. Comparison erodes satisfaction by measuring value against fluctuating benchmarks. Behavioral economists have documented that price judgments rely on hidden reference points and contextual narratives. Consumers routinely upgrade marginally improved devices and splurge on high-adrenaline events, trading durable utility for momentary dopamine. Adrenaline, scarcity, and social proof undermine mathematical evaluation and long-term utility assessment. False urgency and artificial scarcity prompt regret-prone choices. Reassessing financial justifications, recognizing anchored comparisons, and resisting manufactured scarcity enable decisions that favor lasting value over impulse-driven experiences.

Read at Psychology Today