The relativity of values causes us to use money irrationally. I go to the supermarket to buy a $15 pen, and the clerk smiles and says, “You can buy this pen for $7 if you walk 5 minutes from here.” Then, most people walk five minutes and buy a $15 pen for $7. But if you want to buy a $1,000 jacket and the clerk smiles and says, “You can get a $992 jacket in five minutes from here,” most people simply buy the $1,000 jacket. Reasonably, walking for 5 minutes equals the effort, and the profit of $8 is the same. However, people might go to a store that sells pens cheaper, but not for the jacket, because the discount rate is too low. In other words, the relativity of comparing values makes us act irrationally. The pen’s discount rate is 55%, and the jacket’s is only 0.8%. Yet, the total amount is the same for all $8, and the effort to gain that profit is identical. Attitudes and misconceptions about consumption influence how we build wealth. - Joseph’s “just my thoughts”
“Bian Que” is a doctor of ancient China. He met “Duke Huan”, the king of the country “Cai”, and asked, “You have a serious disease, but it is better if I only treat your skin”. Then “Duke Huan” thought that “Bian Que” was trying to cheat the skin disease to make money with the serious disease, and refused his treatment. Every 10 days, Bian Que went to give advice, but Duke Huan, who refused to treat the disease, eventually died. However, King Wen of Wei came to Bian Que and asked. “I've heard that your three brothers are all doctors, but which one is the best?” “The big brother is the best because he cures it with medicine before the disease is revealed, and the second brother is excellent because he uses acupuncture when the disease is small, and then I'm the third of them because I do surgical operations on the serious disease after it is revealed,” he replied. The king asked again. “Then who is the richest?” Bian Que also answered. “My big brother heals the disease without a...