For everything else, there's Walmart.

applying estimative justice

One of my favorite things to do is tag my wife in a Facebook “check-in” whenever we go to Walmart together. I do this because she hates Walmart, and I still think this is the way to a girl’s heart. 

A layer below that charm is actually a genuine disagreement. I love Walmart and I don’t understand how anyone might not. Walmart is a ruthless competitor that has crushed innumerable, inefficient Mom & Pop stores. So I guess if I was a Pop in that scenario, I might not love Walmart. But it has brought lower cost goods to consumers who might not otherwise be able to afford them, which far outweighs the loss to the Moms and Pops. It has also brought those same lower cost goods to the rest of us who could afford higher quality, but choose to buy the lower quality, lower cost versions available from Walmart. 

I love Walmart because it also makes the vast majority of the population wealthier. It does so by providing us access to goods at a lower cost than would have been provided by local establishments of yesteryear. Your real wealth, as we have experienced this past year and a half with the biggest spike in inflation since the 70’s, is really a function of what you can buy with the cash in your pocket, not the absolute amount of cash you have. When prices shoot up and you have the same amount of money in your pocket, you are poorer. The opposite is also true: when prices are held down, you are wealthier. Walmart has had what economists call a disinflationary effect on our economy by finding ways to provide more goods at lower prices for us. That effect is not limited to Walmart customers. By making low-end, lower quality goods available at cheaper prices, Walmart forces even higher-end retailers to cut prices, because at the margin, we consumers are price sensitive. It’s not that Nordstrom customers will suddenly start shopping at Walmart, but Target customers might switch to Walmart. By keeping Target from raising its prices, Walmart keeps the next rung up (Target) from raising their prices, Target keeping its prices low keeps the next rung up (maybe Macy’s) from raising their prices, and so forth. It is a beneficial cascade, such the effect on Nordstrom by Walmart is real, if indirect. 

The happiness literature tells us that getting a new, nice thing, really does make us happier… for a little while. But the hit of happiness wears off as the thing we bought becomes familiar - like your favorite new song that you play over and over, until you are over it - and our happiness settles back down to our baseline until we buy another new, nice thing. Like a drug - you get a temporary experience of euphoria, but then it wears off and you start looking for the next hit. Happiness researchers call this the “hedonic treadmill” (this is a good discussion of the hedonic treadmill). Like a treadmill, buying and consuming ultimately leave you exactly where you were. 

One of the reasons the (long-suffering) wife and I are reasonably financially successful despite having worked modestly compensated jobs our whole adult lives is because we’re pretty good about avoiding the materialistic hedonic treadmill. The Adventure Van is a 2004 Honda Odyssey, as I’ve mentioned before. Would I take a brand new, 2023 Honda Odyssey? You bet. If it were free. But at just under 200,000 miles, the Adventure Van still takes off at a good clip when I hit the gas and I haven’t had a car payment since… well, 2004 when I bought it off the dealership lot for $24,000, cash. Because cars are a huge waste of money. Assume I bought a new car today for $40,000 and financed it for five years with an APR of 7% - that would be a monthly payment of $792. I’ve had to put about a thousand dollars into the Adventure Van this year, but that’s less than 2 months payments on a new car. I treat cars as “A-to-B machines”. Does it get me from A-to-B safely? Then it’s good enough. Other than getting me to and from an experience, like hauling my kayaks down to Jackson’s Landing to go paddling, I don’t get a lot of happiness out of a vehicle. 

(Jackson’s Landing)

If you gave me the above-mentioned 2023 Odyssey, I would be happier, for a while, until I got used to having it and then I would be back where I was, at my baseline, until I got the next, new thing.

The happiness literature does say that while things don’t provide for lasting increases in happiness, experiences, especially those that are meaningful, can lead to rising levels of happiness. 

I’ve defined Meaning before (see RWL #291) as: 

Meaning = Competence x Contribution x Connection

Things can’t provide any of the components of meaning, but things can enable the experiences that lead to meaning. Having a baseline of safe and adequate housing, safe and adequate transportation, enough food, etc. are all things that contribute to Maslow’s baseline of physiological and security needs. Without them, you can’t move on to having higher level experiences. I’d categorize simple housing and transportation as necessary and enabling of experiences. The A-Van gets me where I need to be - work or other places. The LHH has provided a home for my family, a place to gather with my friends, and a place to work. I’d classify these sorts of things as both necessary for survival and enabling of experiences. Thinking of things as either necessary for survival or luxuries, and enabling of experiences or not, gives us a useful 2x2:

Things that we need for survival and enable experiences are investments. They pay off over time. 

Daughter #3 recently moved into her own apartment and she’s discovering there are a lot of things that she needs to buy that she never had to when she was on the family payroll. Toilet paper, towels, dish detergent. These are all things that are necessary for living, but don’t really enable experiences, except by keeping you functioning. I classify these things as necessary for survival, but not enabling of experiences. This is what Walmart is for. You want to economize on these things. Get them cheap, and save your money for things that are either necessary for survival and enabling of experiences, or things that aren’t necessary, but enable experiences that are purely for fun and joy - leisure activities. By spending less on things on items that do not enable experiences (the bottom row of the 2x2), we get richer. That’s why I love Walmart. It enables us to minimize waste and focus on what is important (the top row of the 2X2).

So we’ve talked about the right column - things necessary for survival. Luxuries, in economist-speak, are things that you don’t need for survival. This column can also be divided into two groups: those that enable the kinds of experiences that meaning to your life and those that do not. My collection of kayaks, as much as it hurts me to admit it, are not necessary for survival. But they do contribute to my experiencing competence and connection (sometimes to friends who go with me; always to nature). My collection of camera gear enables me to engage in all sorts of meaningful experiences. I’ve shot weddings and funerals, done portrait work, and I give away all of my work with a Creative Commons license so I see it show up all the time across the web. Photography meets all three components of Meaning for me. My dad is a wood worker and has some very nice, rather pricey tools - but these tools allow him to engage in his hobby and make beautiful pieces of furniture and other objects. 

(my father teaching Daughter #2 how to use a lathe - competence, contribution, connection)

A nice car might really be just the thing that lets you do that for your lifestyle, if you have a farm or you do off-roading for a hobby, but I’d venture to guess most people blow way more money than necessary on cars and other things that don’t actually enable more meaningful experiences. The excess spent is waste that would have been better spent on something else. We should carefully spend more money on things that enable us to engage with our world in more meaningful ways. 

The last category are things that are neither necessary for survival, nor enable experiences. These are the things that give us a temporary bump in happiness, but eventually just become a burden. They are destined for a yard sale or donation to Goodwill, yet they take resources from the top line - the things that actually make us happy. 

Last week I wrote about Adam Smith’s Estimative Justice, which I defined as “Accurately evaluating relative importance and worth.” It’s easy to fail to do justice to all the things in our life. To ensure we live meaningful, and therefore happy lives, we need to accurately evaluate the relative importance and worth of things. Beautiful things that do not lead to meaningful experiences suck away resources from the things that do. It’s easy to lust after beautiful but unnecessary things. To be financially free and more happy, because nothing causes unhappiness like financial stress, we should carefully husband our financial resources. Things that are genuinely important, that add to our experience of life by enabling more engagement, are worth extra resources. For everything else, there’s Walmart. Leave the rest on the shelf.

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This post is meant to complement my previous post on spending (The Lieutenant Mobile). That post focused more on flows. This post focuses more on the actual stuff. I hope it’s helpful. I’m as easily fooled as the next guy, and have plenty of regrets about things I have wasted my money, and therefore my time, on. Luckily I have a wife, who, while she hates Walmart, has a very good sense of Estimative Justice.