The Checkout

Regretting Extra Therms Among Other Things

Annys Shin

A couple of weeks ago, I did a piece on how to go about buying natural gas and electricity from someone other than your old utility. Soon after, I got a call that I think highlights an element of so-called energy choice that I touched on indirectly in the story: buyer's remorse. It's not a sensation that usually accompanies the reading of an electric bill, but several of the folks I talked to for the story--including those who saved money--experienced some share of regret.

The Northern Virginia woman who called me has been buying from an alternative gas supplier for the past two years. She saw that only in two months out of 24 was the market rate higher than the rate she and her spouse had signed up for. She estimates that in total, the switch cost them an extra $500. When she called to see if they could cancel, she was told they would have to pay $50. Her husband didn't want to pay. But in hindsight, she realizes now, they should have. They would have come out ahead in the long run.

Suffice it to say, she's not renewing.

When I started talking to these folks, I wondered why in the world anyone would bother doing this? Then I remembered an article I read years ago about happiness researchers who say there are two kinds of shoppers: maximizers and satisficers . (The latter is derived from the word satisfice which means "to decide on and pursue a course of action satisfying the minimum requirements to achieve a goal.") Maximizers won't stop until they've found what they're looking for. Satisficers are more likely to compromise. Satisficers, if I'm remembering correctly, are happier people.

I'm more of a maximizer. But since I read about that research I've tried to mend my ways. When I find myself shopping past the point where I'm enjoying it, I say to myself (in my head of course and not aloud) 'satisficer!' as if invoking it would somehow make me that way (a la the Wonder Twins). It hasn't worked really. Far more effective has been shopping with an infant who has no patience for sitting in grocery carts. Recently, I made the mistake of stopping to ponder the relative merits of Oaty-os versus Cheerios only to look over and see her gingerly pick up a jar of baby food and, before I could grab it from her--smash it on the floor.

I think I already know the scientific term for that type of shopper: mom.

Are there any other wanna be satisficers out there? And do you think we would really be happier if we had bought that couch last year that was the right color and height but wasn't cushiony enough?

By Annys Shin |  May 7, 2008; 7:00 AM ET Annys Shin
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I am, to my unending chagrin, a maximizer by nature. I have a neurotic, perfectionist personality that is simultaneously delighted and bewildered by the overabundance of consumer choices we have today. Do I wish I were more of a satisficer? Sure, but it's against my nature.

Like the N. Va. woman you mentioned, I have fretted over whether to lock into a fixed rate for natural gas or to go with the market rate. Being the wonkish type, I went online to do some research, but found little information that an average consumer could apply to the situation. I eventually decided on a fixed-rate contract, thinking it would give me more peace of mind in the long run. But I ended up second-guessing that decision anyway. Frankly, I would have been happier if I were not given any choice in that matter.

Then there was the last time I shopped for running shoes. I researched models on countless web sites and tried on pairs in stores over a period of 3-4 months before I finally became tired of searching for the right shoe in the right color scheme and at the cheapest price. I settled on a pair that met most of my criteria -- and even then I wasn't completely happy with my purchase. (Not enough forefoot cushioning.)

In the supermarket I spend a lot of time comparing products, poring over ingredient lists, calculating unit prices, etc. When I finally go to check out, at some stores the cashier asks if you found everything that you were looking for, and to this I always answer yes, but in my heart I know that what they've asked is an impossibility, in the maximizing sense. (A certain U2 song comes to mind.)

I think you've hit upon the way to counteract the tendency to maximize, which is to have limits (self-imposed or external) that force you to make a decision in a certain time frame or when certain attainable conditions are met, so that you don't keep searching indefinitely for that Platonic ideal. It's easier said than done, though.

Oh, and regarding the relative merits of Oaty-os versus Cheerios: I've found that Cheerios actually taste a bit toastier and "nuttier" than the store-brand equivalents at Giant and Safeway. (According to Consumer Rpts., Malt-O-Meal Scooters taste as good as Cheerios, but I haven't tried them yet.) The same goes for Grape-Nuts and, to a lesser extent, Wheaties: the name brand cereals are just a tad tastier than the generics. The taste difference isn't enough to make me pay full price for the name brand, but I'll pay a small premium if coupons and sales can make up most of the difference.

Posted by: Drew | May 8, 2008 7:41 PM

Any economist will tell you that anyone who is calling him or herself a "maximizer" by your definition is not valuing leisure time properly, and is not maximizing anything.

Your shopping maximization must always be in consideration of time contraints (and resource constraints if you are driving around to a bunch of places). Your "satisficers" are, in fact, the maximizers--technically, constrained optimizers--because they are maximizing net benefits--shopping just long enough to find something that yields enough utility.

I tend to follow a simple of thumb, developed by some economist or statistician (or perhaps I am imagining that)--3. The incremental improvement in finding what you are looking for declines as you widen your search, e.g. the price or quality difference may be 20% with two places, but only 25% with three, 27% with four, etc. That actually corresponds well to location space models, where three competitors in a given area are sufficient to give something approximating perfect competition. So just look three places.

I recently applied this to new car shopping (I informed each dealer about what the other was saying) and it worked perfectly.

Posted by: joe | May 12, 2008 3:49 PM

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