Shift To A Utility Based Mindset When Splashing The Cash

http://investingtips360.com/?klaystrofobiya=%D8%B7%D8%B1%D9%8A%D9%82%D8%A9-%D8%A7%D9%84%D8%A8%D9%8A%D8%B9-%D9%88%D8%A7%D9%84%D8%B4%D8%B1%D8%A7%D8%A1-%D9%81%D9%8A-%D8%A7%D9%84%D8%B0%D9%87%D8%A8-%D8%B9%D8%A8%D8%B1-%D8%A7%D9%84%D8%A7%D9%86%D8%AA%D8%B1%D9%86%D8%AA&894=8a utility

http://1conn.com/?binarforexar=ШґШ±Щ€Ш·-Ш§Щ„Ш§ЩѓШЄШЄШ§ШЁ-ЩЃЩЉ-Ш§ШіЩ‡Щ…-Ш§ШіЩ…Щ†ШЄ-Ш§Щ…-Ш§Щ„Щ‚Ш±Щ‰ We are all consumers whether we like it or not; you simply can’t lead life without buying certain things whether that’s the food that you eat, the clothes you wear or the soap you wash with.

The problem is that we have reached a stage, in the West at least, where goods are no longer just purchased when needed but are seemingly part of a cultural identity that we cannot bear to be without. Keeping up with the expectations of society, especially one in which inequality has grown dramatically over the past 30 years, means we now associate what we own with our sense of worth and thus we always want more of something to convince ourselves that we are more worthy members of said society.

This obsession with consumption means that our ecological footprint has, over the years, risen to a point that is wholly unsustainable not just in terms of greenhouse gas emissions and the potential for disruptive climate change that this creates but also in the profligate approach we have to our natural resources.

The planet simply cannot cope with the demands we are putting on it; indeed the WWF estimates that we’d require 1.5 Earths to maintain our current level of resource use. This figure rises to almost 5 Earths for the UK and is similar for other developed nations.

Using Utility To Make Purchasing Decisions

In economics, utility is defined as the total satisfaction one receives from consuming a good (or indeed a service). It is my belief that a large proportion of purchases that we make are not really based on this concept in any way but that if they were to be, we would become a lot more efficient with out use of resources.

For a start, I think that many purchases could be prevented altogether and many others could be changed to have a lower impact on the environment.

Consider clothes for one moment; many of us would openly admit to having more than we genuinely need. Both men and women are equally guilty of buying items that they will probably only wear a handful of times which means the utility gained from them is low. Sure you might get a good feeling when you first wear something out but this soon fades. Full utility can only be achieved when an item is worn over and over almost to the point that it wears out.

The same can be said about more major purchases too. Many people replace their cars every few years despite the fact that there is very little need to do so. Again, full utility can only be achieved when each vehicle is driven to the point at which it becomes unreliable, unsafe or unfit for purpose (if your family grows for example).

Understanding the idea of utility gives you the ability to view potential purchases in a different light and to better assess whether they will genuinely maximise your enjoyment in the long run and when considering all other factors.

The Concept Of Opportunity Costs

Achieving the highest amount of satisfaction is not something that can be considered for an individual purchase, however, so utility has to be combined with an understanding of opportunity costs.

In essence, an opportunity cost is what you give up by spending your money (in this case) on one thing instead of another.

So while you may want that new pair of shoes, buying them might prevent you from enjoying a meal out with your friends. Or buying a new car might mean no family holiday this year.

Negative Utility Is Possible

There are also some circumstances where a purchase can actually lead to negative utility – that is to say zero satisfaction and negative feelings and consequences in its place.

This is something that has happened to many people over the past decade or so as cheap credit became the norm and spending on plastic was done with little or no thought to what it meant in the long run.

Millions of people now find themselves in debt that they can hardly afford to service and, as you’ll know if you’ve ever been in this situation, the stress and worry it creates is huge. Thus, the satisfaction gained through consuming each purchase is completely wiped out by the negatives of being in debt.

Similarly, spending instead of saving can also lead to negative utility. When we buy something, we are making a conscious decision not to save that money. If we later find ourselves in financial difficulty (if we have lost our job or need to make urgent home repairs for instance) then those purchases we made in the past can cause a greater amount of negative utility in our present.

Utility For Society

While it is not something that often comes to mind when out shopping, a more holistic view of utility would have to consider the satisfaction derived from the consumption of a product to the whole of society (and by society I mean planet).

So while the actual purchaser might get utility out of the product, are there further benefits or even potential costs to society?

What with the demand for scarce resources, the answer is often that the production and consumption of goods not only has some direct cost to someone else, it also has a temporal effect on the potential utility to be gained by society in the future.

Quality Over Quantity

So what does all this mean?

Well in my opinion, the concept of utility suggests that when we do buy things, a small amount of higher quality items is better than a lot of lower quality items that we either won’t use as much or that will last a shorter time (hence less satisfaction gained).

I don’t know about you but I like my TV and my movies so when it came to my home entertainment system, I decided I wanted to get as high a spec as I could afford. Three years later and my equipment is still as good as the majority of things you can buy in the shops and my intention is to keep both the TV and the surround sound for at least another decade or more (assuming it remains in working order). I could have spent far less initially and done something else with that money but I’m fairly sure I’d have found myself wanting to replace the cheaper equipment already.

The same goes for other household essentials; I have close family members who seem to change their sofas every 4 or 5 years while others have had the same high quality three piece suite since I was very young and it’s still going strong.

More often than not, a higher quality item will provide greater utility over its lifetime and result in a smaller ecological footprint because of its longevity. This goes for clothes, cars, household items, technology, and anything else you can think of.

So in summary then, only buy things that actually bring you satisfaction; never believe that what you buy is who you are because this is simply a lie that has been woven into the public mindset. Try to buy long lasting quality items that you will get use out of for years to come and try to save when you can to maximise future utility too.

Steve (156 Posts)

I am chief writer and editor on Green Steve. Blogging since 2011, I like to delve into a wide number of topics to help people reduce their carbon footprint. You should follow me on Twitter here. And add me to your Google+ circles here.

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