Comment by ravenstine | Hacker News Reader

Comment by ravenstine | Hacker News Reader

Parent Full thread

> I assume the folks who are struggling are not stupid .. and have looked at every conceivable way of stretching their dollar

One might assume. Possibly the biggest trouble of dollar stores is that a lot of the "deals" are the result of simply selling things in smaller quantities. The next time you visit a Dollar Tree, compare the actual amount that you get for something like flour, oatmeal, detergent... really anything, to the sizes sold at normal stores. Things are often cheaper at Dollar Tree and Family Dollar because the containers are smaller, often 2/3 size, and sometimes the price for goods at dollar is more than elsewhere when adjusted for quantity. There are some deals to be found at Dollar Stores, but it's not as if similar deals can't be found at normal stores. Dollar Stores compete because of perception.

I occasionally stroll into a 99 Cents Only store and there was a time when they had big juicy mangoes for 1/3 of the price of the mangos at the local Ralphs or Vons. I bought some on the spot and they were delicious. But that's one of the ways that dollar stores get new believers; they will have a few really good deals on things that aren't really essential, like mangos, to get people to think "wow!" and assume that all the other low prices around them are just as good of a deal.

> The next time you visit a Dollar Tree, compare the actual amount that you get for something like flour, oatmeal, detergent... really anything, to the sizes sold at normal stores.

Many financially constrained people have a cash flow problem - they often end up spending more as you said.

However, buying larger quantities is still not an option because the money is simply not there. Being able to plan out a month is a luxury in some ways.

Exactly. It's one of the biggest issues in trying to help people out of poverty. As Sam Vimes's "Boot Theory" sums it up:

>The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

>Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

>But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

>This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.

It's essentially true. Poorer people have to buy the smaller quantities/cheaper materials because it's all they can afford. And because of that, they end up having to buy it more often, often spending more in the long run. I'm actively trying to change my wardrobe now that I've realized that, and buy clothes that will last longer as opposed to cheaper ones that I have to replace more often. Thankfully, I have the money to do so, but many do not.

I like the boot story as much as the next guy, but is this actually true in the real world? By which I mean something like this: In what categories of products do rich people actually spend less than poor people? Are there any?

It's certainly true that top-end clothing lasts longer than cheap stuff. But the people who buy it like nice things, and variety. Maybe car repairs? But probably a trick of counting the new-car service plan as part of the purchase price.

it's all an information game of continuously and strategically evaluating every purchase!

i buy almonds at the indian grocery for $5/lb in 3lb qty rather than $7. i drive a used toyota camry even though it's boring as hell but low $/mile.

heck part of the value of desktop pcs is their modularity... there's also a subreddit called buyitonce iir.

> there's also a subreddit called buyitonce iir.

You're thinking of /r/BuyItForLife.

In my case, saving money by buying nuts in bulk is like a frat house saving money by ordering kegs.

More seriously I've also saved money by having a prepaid phone plan which was a lot more expensive per minute. And by buying super-cheap ice skates which I'm sure would have worn out after 10 times... and throwing them out when I moved soon after. In other words, sometimes the simple calculation by which a more durable item is cheaper, leaves out important things.

Rich people can afford to buy white goods. They can buy online using a credit card (and pay off the balance before they're charged interest).

Poor people have to buy on hire purchase or using payday loans, which end up being significantly more expensive.

Wealthy people in the UK can buy their utilities using direct debit, which is normally cheaper than paying the bill as it comes in. Poor people may be on a pre-payment token meter. These used to be more expensive than a normal bill.

There's a bunch of stuff like this.

These are all true, but they are weaker examples than the boots, where the rich guy bought a higher quality version of something which both needed, and still saved money.

A cheap used car will get you where you want to go, but will cost more in maintenance and fuel to get that job done. It will need to be replaced more frequently than the car purchased by someone who will buy new or who will purchase a 'new-ish' used car, and when the time comes for replacement the rich guy will probably have some residual value in the car while the cheap car is probably being replaced because it is no longer operable.

I agree that this could in principle happen, for some values of cars. It could also literally happen with shoes, you can walk a lot more miles in $200 hiking boots than in four pairs of $50 sneakers. And in GGP's example, someone with time to shop around, and a credit card could buy the exact same crappy microwave for $40 online, instead of $50 downtown right now.

What I'm disputing is that this is anything like the pattern, and that this is useful for thinking about poverty. People with more money spend more money on their cars, their clothes, their kitchens. They aren't staying rich by their ability to save 5% on their (larger) electricity bills by paying on time.

The thing is that it all adds up, and poor people are constantly being forced to repurchase simple things. Yes, well off people might spend more on cars, clothes, etc., but they don't have to do it as often. Overtime, the fact that poorer people have to buy more often adds up to them spending more money. Plus, it means they don't have any time to save up the money, since they always have to worry about replacing something frequently as opposed to 10 years from now.

I've seen it with people buying jeans for work. Buying the cheapest quality jeans possible from a Rural King, and then having to buy another pair again in a few months. Same with tennis shoes from Payless Shoes, for instance, versus buying Nike.

For cars, you have to look no further than the type of car a person can buy to see this in action. Poorer people can't afford as nice cars, which means their cars are likely to be older and more likely to need repairs and break. Which costs them more money. And they'll need to buy a new car sooner, which costs even more money. Even look at buying in bulk versus buying singly. It's more expensive right away, but often lasts longer and comes with more, meaning you have to buy less often and save money in the long run. It's pretty much all the same concept.

Many people say this. I'm sure you can invent examples where a cheap car is indeed a false economy. But I'm pretty sure that, on average, total money spend on car per annum will be strictly increasing with income.

It would be interesting to have some actual data. An easy thing would be to look across countries, are there any cases where a poorer country has a larger (in absolute terms!) motor sector than a richer one? I would be surprised, this is certainly not the pattern.

There's two problems with this. (1) It does no good to look at just pure money spent. You need to look at it in terms of percentage spent per year. And I'd say it does easily favor the rich, especially since they can often get loans and get a better deal on interest rates that poor people often can't.

(2) It does no good to compare across countries either. The necessity of a car is a distinctly American thing. In many countries you can get by without one thanks to public transportation or walking. America's poorest often don't have either of those luxuries, thus it'd be impossible to compare to poorer countries.

That said, I do know it effects clothes pretty heavily. I've bought two pairs of cheap tennis shoes this year. Now, I knew they were cheap and that they likely wouldn't last long and I didn't need them to, which is why I went ahead and got them. But for some that's all they can afford. If they go through three pairs, they've spent around $60-70, which is enough for one good pair that would last over a year. But they often don't have that money to drop on one good pair, and thus have to keep buying cheap ones. It's even more prevelant with boots, because they're more expensive.

And it happens with clothes too, especially when people have to wear the same thing to work regularly, and thus often wear the same two or three pairs of jeans. They wear out quicker, and if they're buying cheaper material, it happens faster too.

Do you hold that people earning (say) 30k actually spend more dollars on clothing than people earning 50k, per annum? (In similar job types, similar area, etc.) This is the claim of the boot story, and I don't buy it.

Although it would be nice to have data. I guess the technical term is something like "inferior good", and I thought such things were rare beasts, not such broad categories as clothing. (Perhaps things like fake-leather belts would qualify).

Do they spend a larger proportion of their income on clothing? This could go either way, I think, rent hurts. But that's a different question to the boot one: If they spend more only in proportion, not in dollars, then they spend the same or less!

Patently not true, although not obviously so: https://www.mail-archive.com/kragen-tol@canonical.org/msg003...

That, I am not disputing. It doesn't change the fact that people probably aren't finding many bargains at such places. Dollar stores basically make being poor viable, but there's little if any dollar-stretching going on. Having been poor myself at times, I do understand that smaller quantities are often the better choice, but they should not be mistaken as bargains.

Having known other poor people, a lot of them(as in not all) indeed think that they are finding bargains at dollar stores. Nobody wants to hear this, but a significant portion of the lower-income segment are in their situation because of their mindset.

The price per unit may be higher but for someone with limited cash and no credit, that may still be a better option.

Reply on news.ycombinator.com