Everything has a price and there’s no such thing as a free lunch (though the cost of a salad and blackberry lemonade – to go – at Wildflower Café is awfully reasonable). If you’ve ever wondered why things cost what they do, The Price of Everything by Eduardo Porter explains. “Prices are everywhere.”Even if some of Porter’s claims are hard to take, he’s probably right. He compares the price for sorting garbage in Norway (about $114 per ton for somebody else to do it) to the earning of a waste picker in New Delhi (up to 30 rupees a day, or less than a dollar, for a child working the city’s dumps). Citizens in poor countries, Porter notes, “are more readily willing to accept filth in exchange for economic growth.” Porter is rather politically incorrect in simply writing it off to choice. The theory that “every choice we make” is shaped by the prices of our options is no longer so blindly accepted as in the past. But even if the cost of goods can’t explain everything, it does explain a lot. Why you’re willing to pay three times more for a coffee press from Seasoned Kitchen instead of the cheaper one at Target, for example.
In the chapter on the price of life, Porter notes that “we are all ready to accept that life has a price tag as long as it’s not our own.” He cites an exercise from ethicist and philosopher Peter Singer that might explain why Americans are so tardy in solving the health care problem. Simply ask yourself how much you would be willing to pay in health insurance premiums to keep a stranger alive for one year. Porter also explains (quoting Schopenhauer) why we often mistake money for happiness. We think of money as an abstraction, so the person who “is no longer capable of enjoying human happiness in the concrete devotes himself utterly to money.”
Among Porter’s hard truths are some interesting tidbits. The kingdom of Bhutan in the Himalayas keeps track of economic growth but also “gross national happiness,” or GNH, which it plans to use to evaluate government policies. The most recently approved Bhutanese constitution has the world’s first GNH index which tracks such things as community vitality, good governance, and time use.
Cultural traditions bearing on the status of women can either boost a nation’s economy – and the economic benefits men in that economy – or set it back. The chapter entitled The Price of Women, reports, surprisingly, that college graduates are more likely to marry. “The better educated are marrying later,” according to Porter, “in their thirties and forties rather than their twenties, but they are much more likely to stay married.”
It turns out that even free isn’t free. Typically, things that are offered gratis have their cost incorporated into other products – so you may not pay for your free lunch, but you pay more for drinks than you would otherwise. “Free is precisely the kind of concept that can make us part with our money without noticing that we are doing so,” because it is used by businesses as a device to lure us in. Getting something free induces us to spend more in other ways as well. We feel we owe something back when we get something free. Even gifts end up having a price tag. Every gift requires some kind of reciprocity.
The proliferation of free music, movies, information (even legal and medical advice) on the internet is astounding but entails another kind of cost. Porter cites a law firm in California that offers “experience” to young lawyers in place of compensation. He calls this “Google spirit” and he says that more and more services are expected for free, including an individual’s labor. He predicts that the expansion of free things will actually reduce the availability of information and goods over the long term because if no one gets paid “we will stop producing.” Religion and our collective future have their costs too.
Porter’s book won’t tell you how to save money, but it will help you figure out why you spend and what the costs might be for living the way you do.
Constance DeVereaux, PhD, writes business book reviews for Flagstaff Business News. She is also a Coordinator for the Arts and Cultural Management program at Northern Arizona University and Principal Manager, DeVereaux et fils, Consulting.