17 October 2008

Misplaced Frugality and the Anchoring Error

I'm continuing this season's theme of trying to scrimp on food while in the States so that I can at least pretend to justify new clothes and electronics purchases to myself, even though saving a buck on a bagel or switching to filter coffee isn't ever going to equate to the new pair of J. Crew jeans I have my eye on (if they ever get my size in stock).

This misplaced frugality is getting out of control, though, and I am definitely being affected by some cognitive biases--especially the anchoring effect. Let's review the evidence:

1) Most days, I have a PB bagel for breakfast, one for lunch and pasta and veg. for dinner.
2) Some days, I will have lunch or dinner out and will worry I'm overspending.
3) In pricey old Angleterre, spending more than £6 on a Chinese/Italian takeaway or £10 for a meal and wine in a restaurant sets off warning bells (this is for lunch or casual dining; I have no objections to paying more for a nice meal out).
4) Given the current exchange rate, this is $10.50 for a takeaway and $17.30 for a lunch/casual meal.
5) I still found myself freaking out tonight when I finally escaped my desk at about 8.30 and was way too tired to cook and so went to the Chinese takeaway around the corner. I looked at the menu and found that most things are over $10. I was going to order chicken with cashew nuts and some rice, but this would have cost $11 plus tax, so I opted for the chicken fried rice dish (egg fried rice, chicken, peas, onions of spring--these are a few of my favourite things). Even discounting the fact that the portion was so huge, it will probably be tomorrow's dinner too, $7 is pretty damn cheap for a decently cooked meal. It wasn't even a super-cheap Chinese takeaway either--there were tablecloths on the tables and the staff were even vaguely attentive and prompt. And let's face it, $11.50, or £6.60 for the chicken dish with rice (again, probably enough for two small, British girls) is still very cheap.

Somehow, when I look at a price out here, although I know it is given in dollars and I know that I can practically divide the number by two at the moment to give me the price in pounds, my automatic, unconscious reaction is that "11" is too much to be paying for takeout (and similarly that "5" is too much for a chicken, Caesar salad from Whole Foods). My brain is obviously anchored by years of over-priced British food and won't quite accept that these prices are perfectly reasonable and much better value than said over-priced British food. Naturally, I loathe this irrationality and the irrationality of save a little, save a little, save a little, spend a lot, save a little, not to mention the cognitive caffeine bias.

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