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Megan McArdle

Megan McArdle - Megan McArdle is a senior editor for The Atlantic who writes about business and economics. She has worked at three start-ups, a consulting firm, an investment bank, a disaster recovery firm at Ground Zero, and The Economist. More

Megan was born and raised on the Upper West Side of Manhattan, and yes, she does enjoy her lattes, as well as the occasional extra-dry skim-milk cappuccino. Her checkered work history includes three start-ups, four years as a technology project manager for a boutique consulting firm, a summer as an associate at an investment bank, and a year spent as sort of an executive copy girl for one of the disaster-recovery firms at Ground Zero … all before the age of 30.

While working at Ground Zero, Megan started Live From the WTC, a blog focused on economics, business, and cooking. She may or may not have been the first major economics blogger, depending on whether we are allowed to throw outlying variables such as Brad Delong out of the set. From there it was but a few steps down the slippery slope to freelance journalism. She has worked in various capacities for The Economist, where she wrote about economics and oversaw the founding of Free Exchange, the magazine's economics blog. She has also maintained her own blog, Asymmetrical Information, which moved to The Atlantic, along with its owner, in August 2007.

Megan holds a bachelor's degree in English literature from the University of Pennsylvania and an M.B.A. from the University of Chicago. After a lifetime as a New Yorker, she now resides in northwest Washington, D.C., where she is still trying to figure out what one does with an apartment larger than 400 square feet.

It's not spending, it's an investment

By Megan McArdle
Dec 8 2008, 1:35 PM ET Comment

Being that I have recently purchased a car, lost half my retirement savings, and rented a house, I feel poor right now.  And yet, like the rest of America, I am feeling the powerful lure of the ridiculous sales our nation's merchants are putting on.  Yesterday, my housemate suggested that flat screens are so cheap, we might want to get another one.  Between the two of us, we already have five televisions (including one that, bizarrely, comes with the house, being affixed to the bathroom ceiling.  No, I'm not kidding.)  But they're SOOOOOOOOOOOOO cheap!!!

I don't think I'm the only one who's noticed the pathetic desperation of the sale come-ons in my email box.  In years past, Christmas sales were a way to steal your custom from more rapacious rivals.  Now it just seems like Macy's is begging. "Please, take this unsalable crap off my hands!  I'll throw in a toaster!  Okay, okay, how about a toaster, free shipping, and a coupon for a half priced entree at Fridays?  What about that?  No?  Pleeeeeeeeeeeeeeaaaaaaaaaaase."

And I suspect that this is shaking loose some of the money that has frozen up.  Because even though I feel poor, it almost seems like losing money to pass up these deals.  As Ta-Nehisi said on Black Friday:  My e-mail was deluged with deals, and I almost bought 42" flat-screen for like $500. And then I got to thinking. Why? Was I even shopping for a TV? Or was I just enticed by the possibility of getting over?"  There's some part of our brain that treats bargain items, even bargain items we don't need, as an investment rather than an expense.  Okay, you've spent $500, but you've got $1000 worth of television!

The problem with this is that utility is a relative, not an absolute.   The market price is (sort of) an average of the item's utility, not a measure of its utility to you.  For us, the utility of another flat screen television is almost certainly less than almost anything else we'd spend the $400 on.  We didn't get the television.  But I still feel kind of like I'm missing out.

But you can't base an economy on this feeling (though Lord knows, we've tried!)  I'm sure all the bargains and loss leaders are generating some consumer spending.  But I'm still willing to bet that most retailers will report horrific margins and a terrible year for profits.


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