Small Amounts Still Matter

One of the oddly persistent mistakes people seem to fall into in a whole host of areas of life is the idea that small amounts don’t matter.

Take, for instance, the illusion that I so often fall into: “This will only take me ten minutes a day. No matter how busy I am, I always spend at least ten minutes just wasting time. Clearly, I can add this one extra activity.”

With sufficient determination, and a low enough starting level of commitments, one can pull this off. But in point of fact the day is made up of a finite number of ten minute increments, and one cannot add an unlimited number of them. Sometimes, adding even one ten minute commitment ends up having more ramifications than one would imagine. And time “wasted” is often curiously hard to stamp out.

People often have this same issue with regards to money. For instance, there was a lot of buzz a little while back about a study purporting to show that Walmart could offer all of its workers a wage of at least $12/hr and pass the cost on to customers, with the result that the average Walmart purchase would go up from 43.95 to 44.41 — a mere forty-six cents!

Small increases in cost, time commitment, etc. often seem as if they were “free” because the amounts are small enough that we have a great deal of difficulty figuring out where they come from. Our natural tendency is thus to assume that they don’t come from anywhere, they’re just “extra”. But of course, they’re not.

If I decide to set aside ten minutes each day to work my way through the Oxford Book of English Verse, I may not be able to track what it is that I forgo doing in order to spend that time, but I clearly am forgoing something. Similarly, if I pick up fast food for lunch twice a week and the restaurant I go to raises its prices by $0.20, that $0.40 a week will come out from somewhere else in my budget — it’s just impossible for me to tell what because I’ll make the allocation unconsciously.

This tendency to assume that small amounts don’t matter becomes especially problematic when you start applying it to large groups of people. Say I’m sitting in the headquarters of a grocery chain and I’m deciding whether to increase the price of “Toasted O’s” by ten cents. I sell 200 boxes of Toasted O’s each week in each of my stores, and I have 700 stores scattered around the country. That means if I raise the price by ten cents, I’ll increase my sales revenue by $14,000/wk which is $728,000/year. Three quarters of a million dollars! Just by raising the price ten cents! What could go wrong? No one’s going to stop eating Toasted O’s or go shop at another store just because of ten cents, is he?

Well, actually, at the margins there probably are a couple people who were already on the verge of switching to some other breakfast food or some other grocery store, and that price increase will happen to be the ten cents that breaks the camel’s back. But much more common is that customers won’t exactly notice, but something somewhere will change. There’s no truly free money or truly free time.

Someone will pass on the Toasted O’s that day, someone else will buy them, but end up not buying some other product, yet another person will find that he doesn’t have quite enough spare change in his pocket to buy that soda from the machine at work. It all comes from somewhere, even if it’s impossible to track.

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