Thrift Shopping: a Lesson in Behavioral Economics
The perfume of stale detergents and musty books hits me when I walk in. It’s disorienting at first, but it translates into something familiar. I’m greeted by rows of shoes organized by color, starting from red heels so tall and sharp they’d look killer on anyone, to some wilted, purple sandals. The fluorescent lights of the thrift shop garishly illuminate dozens of racks of clothing and people milling between each. Whether it's Goodwill, Salvation Army, or Red White and Blue, the clothing other people donate are treasures waiting to be found by me.
In those moments of uninterrupted bliss, I move quickly. A sweater from a high end store becomes $5, a t-shirt for $2, new boots for $15 (whose original price tag reads $45). They all earn their way into the shopping cart, and I wheel out satisfied — believing I somehow gamed the fashion industry.
On some occasions though, the clothes I bring home never see the light of day. A mental image of my burgeoning pile-of-clothing-that-I-never-wear resurfaced when I read about transaction utility in Richard Thaler’s Misbehaving: The Making of Behavioral Economics. He explains transaction utility as the satisfaction gained from the difference between the selling price and the reference price of a product (distinct from consumer surplus, which is the difference between the price of a product and what one is willing to pay). Perceptions determine reference costs, and I assign a high value for name brand clothing. When presented with the opportunity, I bought it because I was happy that the new selling price was low, even though I didn’t love the piece itself. My pile of clothing attests to that.
It turns out, a few chapters later, that I am also no stranger to the sunk cost fallacy. In my case, it meant continuing to wear an itchy, turtleneck sweater I bought because I already paid for it. After wearing it a few more times and pulling at the scratchy collar throughout the day, I figured I rationalized the cost. But, it would have been better for me to stop wearing it altogether, after first realizing it was uncomfortable if I couldn’t get my money back either way. Between my newfound knowledge of transactional utility (the pile of unworn clothes), and the sunk cost fallacy (the clothes I wish I didn’t continue wearing), I am far more careful when I appraise each piece at the store.
While flipping through clothes, I also try to assess each piece for what it can become. A men’s XXL sweater becomes a dress, after I cut the sleeves, hem the edges, and add a belt. A long floral skirt becomes a halter dress with a discrete clothespin at the neck. A pair of jeans become shorts with a lace trim, taken from from an old skirt. I build a collage. I carve and chip at the denim. I finger paint with needles and stitches.
These instances of creative liberty, combined with the low opportunity cost of a few dollars, all factor into my pride in the finished product, no matter how haphazard. Looking back, they’re a classic example of the IKEA Effect, which, according to NPR, is liking something more because one made it themself. It can cause the creator to ignore the defects of their creation. This effect is coined, appropriately, after the growth of business models like DIY furniture, but it may also be why my creations elicit a disapproving groan from my mom, whereas I see a piece of art that rivals that of Coco Chanel or Giorgio Armani.
Thrift shopping has enabled me to find and create my favorite pieces. Now, my closet is a display case, stitched from the fashion choices of people before me, my own devices, and my knowledge of behavioral economics.