Economists and opportunity cost

The Wall Street Journal has an article that discusses how economists are “cheapskates”. I probably wouldn’t use that term, I would say that economists understand the opportunity cost of different choices and so can pick more objectively between alternatives.

Anyway, what struck me was this passage:

Economist Robert Gordon, of Northwestern University, says he drives out of his way to go to a grocery store where prices are cheaper than at the nearby Whole Foods, even though it takes him an extra half hour to save no more than $5.

So an economics professor only values his time at $10 an hour?  Seriously, what the hell.  This seems like a terrible choice to me.  The only ways I can rationalise this are:

  1. He is exaggerating because he gets some pleasure from that,
  2. He gets some consumption value from driving out to the other supermarket and saving a bit of money.
3 replies
  1. steve
    steve says:

    he must get some social benefit out of the activity. the smugness of buying the cheapest or getting the best deal. maybe he enjoys the travel to an extent also, adding to his savings. otherwise it is most certainly irrational.

    the value he would put on sending price signals could only be the expected value, or the expected probability that those signals will result in lower prices in future periods.

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