A few years back Jen and I often spoke of thinking in terms of "micahnomics" when making normal decisions. I pulled this term from our friend Shifty and his practice of "shiftynomics", though he doesn't readily discuss this (probably because the description is diminutive or demeaning or both) and he now readily refers to "tiggernomics", but I digress.
Shiftynomics, which may be generally described by the rule "why spend your money when you can spend someone else's?", is a theory I observed enacted (very well) when Shifty was a roommate of mine after college. In those days he routinely paid his portion of the bills well after due dates and often ate more than his portion of the foodstuffs. Now he is a property manager of some 200 rental properties and lives the shiftynomic dream--making money directly from the monies of others.
Realizing the potential of certain simple principles Shifty practiced I then began forming the rudiments of micahnomic theory, which may now be described by the rule "why spend your money now when you can spend it later?"
Now I'm sure there are real, older, and more appropriate names for these practices, but I (and quite a few within my nearer circles) will likely continue to describe these practices as shiftynomics and micahnomics and certainly none will be surprised to see that I am a late adopter (of technology for example) because it is simply good micahnomics.
Take the iPhone as an example. This week we witness the unveiling of the 3rd-generation iPhone just 1 year following the unveiling of the first iPhone. And what of note has happened in this first year? Well, besides rolling out 2 significant model changes, a near 70% reduction in retail price. Or, put it this way: if you had waited 1 year to purchase your iPhone, what would you gain? A product significantly better at 1/3 the asking price and a reduction in phone plan charges of at least $250, or roughly $650 pre-tax dollars before considering the deficiency of your product and how you would adjust those dollars spent for present value. Even if you had invested them in something other than gold or oil (normally a good idea) you would have saved about $300 and ended up with a more desirable purchase.
Or, as Apple puts it: Twice as Fast. Half the Price. What they don't say is Did you really think that owning one year could cost so much?
Or you may consider your local television as a candidate to not adopt early. Had you purchased a flat-panel LCD, plasma, or death-ray tv 5 or 6 years ago when they were first available you would also have paid 3 or 4 times the current value of your tube while getting performance and options that likely do not par what is standard now.
Or you could consider micahnomic principles in the purchase of a new car, whether postponing the actual purchase or postponing the purchase of certain desirable options until a later vehicle. I remember hearing that saving $5000 in options on a car purchased every five years... well, let's just say that turns out to about $50,000 in 25 years if you only count the interest from the lost investment. If you financed that sunroof and navigation system then you may as well round up to a fat $75,000 or so.
What I'm saying is... well, I don't know exactly. But I think it would be fair to conclude that patience, though virtuous, has more direct benefits. And satisfaction (not even beginning to discuss the psychological merits of delayed gratification) can have a fiscal benefit even if it is primarily fruit of a well-adjusted spirit. I'm sure there are many better things that have been said about ideas like these by moral philosophers as profound and well-spoken as Solomon and Adam Smith, but I think it would still be fair to say that late adoption can be a good (if not codgery) practice and fine micahnomic principle.
Indeed, why should you pay for it now when you can pay for it later? (If only it were as easy to agree in practice with what you agree in principle).
4 comments:
One could argue that early adopters, with less price sensitivity, allow companies like Apple to launch such cutting edge products. If all were late adopters, we would probably still be using rotary phones... or switchboards! Although, that could be pretty cool...
a very good observation, though my understanding of how the macro and micro markets interact is naive at best.
I'm thinking of a different application to Brent's astute observation. That is, early adopters are paying to advertise for these products.
Apple doesn't need to advertise the iPhone to me nearly so much because my early-adopter friends are doing it for them. They shelled out are willing How many people do I know who have shelled out the bucks for iPhones in its first expensive year, which means they paid Apple for the privilege to personally advertise to me how cool and useful the product is. And they're with me a lot longer and more practically than any other kind of advertising--a much more pervasive reminder for how much I think I would indeed enjoy and benefit from one.
Higher initial price suggests to consumers a higher demand and higher quality. Capitalists love to show off their new gadgets, taking pride in being cutting-edge and having the disposable income to afford it. Signaling. So Apple gives my friends a prime opportunity to signal, so they do, and they become walking advertisements for a great product that they paid to advertise.
found out that ATT upped the ante on Edge network plans--now $30/month instead of $20/month. that increases the 2-year cost of an iPhone from $880 (over regular phone--$400 to buy and $240/year up to $920. very clever. maybe a good reason to adopt early, but micahnomics is still unchanged.
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