With the holiday shopping season coming up, it's a good time to remind everyone that widely known good deals often have extra costs due to so many people trying to take advantage of them at once. Sometimes the cost is something we are willing to pay - for many cyber deals you just have to be one of the first X customers to buy a good that is on clearance. This may involve getting ready at a certain time and expending effort to be among the first in line, but the non-monetary cost is generally reasonable if the deal is good enough. But the most common mistake people make is not accounting properly for time spent. The time spent waiting in line, an activity that few claim to enjoy, acts as a large increase in the price of the goods being sold.
When a fast food restaurant like Chipotle or KFC announce they are giving up free food, lines form around the bloc. People will wait over an hour in line to get food that sells at retail value for less than half of one hour's wage.
And the people camping outside of Best Buy a week before Thanksgiving aren't very likely to find deals that save them more than a thousand dollars.
Going to the mall on Black Friday involves many of these types of transactions, as the extra long lines capture most of the consumer surplus that might be gained from the larger than average sales.
What drives these behaviors?
1. Some people are relatively irrational and either don't consciously value their time or act on the basis of inertia and once they've gone.
2. Some people enjoy the process of waiting in line and getting deals that aren't available to others. This certainly seems to be the case for those camping outside of stores a week before Black Friday.
3. Some people are constrained in the amount they can work, so spending a significant amount of leisure time to save a little more money makes economic sense. Even for those with continuous earnings potential, the next marginal hour of work is likely to be at least slightly less productive than the previous hour of work. (Incidentally, this is why European productivity numbers compare favorably with the US - their shorter work weeks help them prioritize.)
4. Some people enjoy tradition.
People who go for reasons number two, three or four are reasonable. But it is worth rethinking the assumptions as it is likely that there are many people in category 1 who go shopping on days like Black Friday even though they should know better. So before you go shopping and end up waiting in different lines on Black Friday, make sure that you know the true cost of the items you are purchasing.