An article published this week in the New York Times describes the recent increase in sales at budget retailers such as dollar stores. Overall, the story is somewhat interesting and not very surprising - we are in a recession with relatively high rates of unemployment, so it might be expected tha…t folks would be more budget conscious. However, there were a few details that made me think a bit more about behavior and some of the guidance that we provide in the Dan’s Plan program.
First the points from the article: 1) “Some customers…have such modest budgets that the retailers report upticks in spending at the beginning of the month, when government benefit checks and many paychecks come through. Late in the month, sales drop as even multiroll packs of paper towels are ditched for a single roll.” 2) “Many times it is convenient to walk into a dollar store and even though the price per unit, if you will, may be a little bit higher at the dollar store, if they can find that product and still live from paycheck to paycheck, that’s how they’re solving that problem” 3) “The dollar stores have found creative ways to keep their prices low. When commodity costs rose for suppliers, for example, the dollar stores asked them to decrease the number of sandwich bags in a box or pushed them to come up with a cheaper version of the products.” So, together these three points are saying that when budgets are tight and there is a risk of people not being able to meet their needs, they are willing to buy products that are more expensive and of lower quality. An economist might look at this situation and describe such behavior as irrational. However, an ethologist (one who studies animal behavior, particularly out in the wild) might draw a different conclusion. That is because in the field of ethology there is a principle called risk sensitive foraging that would predict precisely this type of behavior. Basically, research in the area of risk sensitive foraging predicts that if an animal’s needs (like food needed to get through the day) are met, then the animal should forage for food in safe and secure environments. However, if the animal is at risk of not having its needs met, then it is actually adaptive for the animal to forage in environments that offer the opportunity for meeting those needs, even if that environment is less safe, more variable, or more risky. You can think of this as, “when you have nothing left to lose, you can run any risk you want.” I think that this evolutionarily conserved principle is at play in the human behavior described above. People are truly at risk of not making ends meet and in that case it makes total sense (given the circumstances) to accept higher unit prices and/or inferior products in order to live (and feed their families) for another day. So what does this have to do with the Dan’s Plan guidance? Well, one of the things that we recommend to people who want to lose weight that can seem a bit counterintuitive at first is that they should always have a healthy snack or food with them. Part of the rationale behind this is that you do not want to let yourself get to the point at which you feel like you’re starving or that your energy needs are at risk of not being met. Why? Because when you feel extremely hungry it becomes very easy to grab the fastest or most convenient thing and to overeat. In contrast, if you have access to a healthy snack or meal that you can eat when you first start to feel hungry, you can ensure that your needs are met and you will be less likely to undermine your long-term goals by overeating or choosing the first available option. With a bag of carrot sticks on my desk,Larry hat tip on NYT story: nudge blog (nudges.org)