Some years ago, I did half a degree in economics. The other half fell victim to a cost-benefit analysis, where I worked out that even if it led to a job in a City bank, studying economics made me so angry that there was a serious danger that I’d kill my econometrics lecturer and go to jail long before then.
I switched to studying law where, with a bit of luck, by the time I killed my criminal-law lecturer he’d already have taught me how to talk my way out of it.
I don’t do economics any more. Still, a friend was recently debating whether to buy a new bike, and I offered to dust off my expertise in the allocation of scare resources to help. I even invented the term ‘velonomics’ to describe it.
He said no: “For God’s sake. I’m only pretending to be indecisive to make me feel less guilty. I don’t want you to spoil the pleasure of it with some sort of rational analysis.”
Velonomics in action
Having invented velonomics, I didn’t want to waste the idea. So, if you’re thinking of buying a new bike, here’s how it works. Don’t worry, by the way. Like all economic theories it’s been carefully divorced from reality, and is designed to get you the answer you want to hear.
The two basic questions are:
1) Do you want a new bike?
2) Can you afford it?
You will appreciate I only include 1) for purposes of logical completeness. The hot potato is 2).
Let’s say the bike of your dreams costs £3,000. If you look at that and think, “Jesus. That’s a lot of money,” you’re doing it all wrong. The money is neither here nor there. You need to look at the ‘opportunity cost’. That’s to say, what would you have done with the money otherwise? It might help to break it down.
Really all we’re talking about here is a sandwich and a couple of cups of coffee a day for a year. Be honest with yourself, where is the carbon fibre in a couple of cups of coffee? Is it an 11-speed sandwich? Of course it isn’t.
If you still haven’t got the money, well, do you have any dependants? Because making them save money is easier than saving it yourself. This is how government economic policy works, and if it’s good enough for them, it’s good enough for you.
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If you’re unsure about impoverishing your family, well, first you’ll never be Chancellor of the Exchequer with that attitude, and second, you need to consider external benefits. This is simply the issue of how other people might benefit from you owning a nice new bike.
A new bike will make you happy. You being happy will make other people happy. (If you’re already happy, velonomics might not be for you.) Other people should be made to pay for your making them happy. It’s only fair.
If a new bike makes you faster, that also means you’ll be home from events sooner, so you’ll be able to do more to help around the house. This will free up other members of the family to pursue their own hobbies. This will also make them happy.
A few years ago, my new time trial bike freed up enough of Mrs Doc’s time for her to sigh heavily and give me a disappointed look.
Finally, velonomics connects to the UK economy. Your purchase enriches a bike shop. The bike shop pays their staff. This makes their staff happy. The staff spend the money. This makes someone else happy. And so on, until your £3,000 bike has made everyone happy.
Frankly, I think you deserve a sandwich and a cup of coffee.