Let's say you're a waffle enthusiast. You might be inclined to skip over the normal waffle irons that everyone else buys and get that super advanced top-of-the-line model, even though it costs a thousand dollars.
So why else - other that extreme waffle love - might you buy a thousand dollar waffle iron? Well, you might be a really rich person who thinks nothing of spending thousands on appliances, so if you're going to get a waffle iron, you might as well get the best. Or you might just be a competitive jerk who needs to beat your neighbours at everything.
I never realized any of this because my interests don't really fit this pattern. Better music doesn't cost any more than regular music. Better technology does cost more, but if you want something high-tech and expensive, you can always just wait a month. And then there's cars. You can certainly spend more to get a better car. But even an ordinary car stretches an average person's finances to the edge, so paying many-times more for a slightly better model is not an option. Thus, if you see someone driving an expensive car, you know they fit into the "rich" category. On the one hand that's unfortunate: there are lots of people out there driving great cars they don't appreciate, and lots of people who would love to drive a great car but never will. But on the other hand, at least those show-off jerks don't get a chance to show-off their cars.
I'm thinking about this after reading a bicycle review in Wired. "Wired does bike reviews?" you ask. Yes. It gives them a chance to indulge their urban hippy San Francisco spirit without directly offending the libertarian sensibilities of their readership. Unfortunately, bikes are quite unlike cars in that they are a prime example of the cost extremes. You can afford an extremely expensive bike if you're in the enthusiast or show-off categories. But unlike the waffle iron, the high end bike is a very public purchase. And while it won't bankrupt most people, it does reach into the are-you-insane territory.
But the main problem is that a person can not only buy a good bike, they can get into the diminishing returns territory. This is a concept I do understand from cars. You can buy a nice luxury/sports car for double the price of a normal car. You can even up the price to the $100,000-200,000 range to get an even better car. But beyond that it starts to get silly. As I pointed out in an earlier article, you can spend into the millions on a car, but at that point you'll only be getting a slightly better car. Of course with cars, by the time your wealth has gotten to the point where you spend an extra million dollars to take another half-second off your zero-to-sixty time, you've probably left normality behind long ago. But a person of average wealth might just consider paying the extra five-thousand dollars to scrape an extra half-pound of weight off the frame. Somehow that's crazier than the million-dollar car, since: 1) you could buy useful stuff with that extra five grand, and 2) you could achieve the same result simply by skipping the fries in favour of a salad.
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