The relativity of values causes us to use money irrationally. I go to the supermarket to buy a $15 pen, and the clerk smiles and says, “You can buy this pen for $7 if you walk 5 minutes from here.” Then, most people walk five minutes and buy a $15 pen for $7. But if you want to buy a $1,000 jacket and the clerk smiles and says, “You can get a $992 jacket in five minutes from here,” most people simply buy the $1,000 jacket. Reasonably, walking for 5 minutes equals the effort, and the profit of $8 is the same. However, people might go to a store that sells pens cheaper, but not for the jacket, because the discount rate is too low. In other words, the relativity of comparing values makes us act irrationally. The pen’s discount rate is 55%, and the jacket’s is only 0.8%. Yet, the total amount is the same for all $8, and the effort to gain that profit is identical. Attitudes and misconceptions about consumption influence how we build wealth. - Joseph’s “just my thoughts”
Paradoxically, one of the reasons for Rome’s demise was that it kept winning wars. Victories expanded the empire’s territory, and the risks increased proportionally. Men, primarily middle-class men, volunteered as soldiers; the larger the territory, the longer the wars lasted, and the longer it took for them to return home. The women who remained at home were forced to borrow labor and became indebted to the nobility. Eventually, the women were sold into slavery, and by the time the men returned, their families had disintegrated. People don’t betray because they’re evil, but because it increases their risk. If the territory you’re in grows, you might reconsider your loyalties to the organization. - Joseph’s “just my thoughts”