In a stark contrast to Anna’s, my average search cost is, I think, too high. Ask me to buy everyday stuff -- bread, toothpaste, diapers, everything. Then I will buy them at the first store I find them. I don’t do comparison; I don’t go to other shops. What drives me in shopping is my assumption that for trivial stuff, prices are pretty much the same everywhere. The slight difference, if any, is just enough to cancel out the trouble to find the lower price – it is not enough to compensate for my time spending on searching.
Anna, on the other hand, is a born shopper. Ask her which department stores are now selling diapers 19,500 rupiah lower than the others. She knows exactly which one. She even remembers how much we spend on a box of ice cream a month ago (and tells me what a great deal or otherwise a rip-off I am about to do when I am buying the same ice cream now – me being clueless on the price change!).I asked her once, why she bothers all the trouble in shopping. She said, she did it with "almost no additional cost". I didn’t believe it, of course. But she argued that she had been doing it for a long time, she knew what to compare and where to do it. “If you do this”, she told me, “you need to invest quite a lot before you know what you are doing, because you have zero knowledge on smart-shopping”. “I did my investment long time ago, and I did it efficiently. So efficient, I can do shopping my way faster than you do yours”.
So I said, “If you know already which store would sell at what price, why then you still need to do comparison?” She responded, “You don’t get it, do you? Shopping is a good itself. I am willing to pay for being able to window-shop before I turn back and buy the one I want. You might think this is bizarre. But it is not more bizarre than your reading lots of those econ books of yours before you decide which one you really believe”. I thought she had a point there.
You might think the answer lies in the marginal utility of income. As theory puts it, marginal utility of income goes in the opposite direction with the level of income – just like any other good. If this theory is true, then you would predict that Anna earns fewer than me. But that would be wrong. (Here’s a little secret: she earns a lot higher than me!). So I resort to my first hypothesis. It’s my search cost. (I’m gonna need to test this sooner or later, I guess).
