Bullshit. Randall is a pretty smart guy, but does he really not understand opportunity cost? The alt-text sounds accurate at least.
Next weeks comic: promotion of National Don’t Buy Gas Day, with a kitty mascot.
What exactly about opportunity cost makes this comic inaccurate?
Uh, am I missing something or is that just a blog post with just the exact same comic?
And the time you spent looking at it is time you could have spent improving your job skills and earning power.
A blog post by a professor of economics. If there were an error, he wouldn’t just repost the cartoon without comment.
You didn’t look at the blog closely enough. He is a Young Earth Economist. He believes Opportunity Costs were put here on Earth six thousand years ago to test our faith.
Like ultrafilter said, it’s a blog post by a professor of economics citing the exact same comic as an example of opportunity cost.
My tentative guess is that the OP is trying to argue that the claim about “spending nine minutes to save a dollar = working for less than minimum wage” is inaccurate because the average driver is not actually foregoing paid work time to hunt for cheap gas.
Presumably, the time spent going out of one’s way for cheap gas would otherwise be spent in less profitable activities, so it’s inappropriate to evaluate it in terms of working.
I don’t really understand this line of reasoning, but it’s my best shot at what the OP might have meant.
Spending 9 minutes of your time to save $1.10 (an 11 gallon fillup at 10c savings) works out to $7.30 an hour, very slightly over the federal minimum wage of $7.25. Assuming you don’t put any time into researching gas prices, and aren’t held up waiting for service at the lower-price place. And you don’t live in a state that has a higher minimum wage, as many of our better states do. (Also Alaska and Florida)
Now, the thing Randall may have forgotten was taxes. Assume 25%, that comes to $1.81 per hour. That makes the take home minimum wage $5.44, which you can clearly beat given the assumptions above.
However, it also doesn’t count the fuel you spend getting there. Assuming that’s three miles out of your way, and assuming your vehicle gets 26 miles to the gallon, that’s about .23 of a gallon. 69c assuming $3/gal gas. Toss in another 1c to cover general wear on the vehicle, and your 9 minute side trip costs you 70c. Which reduces our total ‘profit’ for each run to 40c. So your actual rate of pay is something like $2.67. Which I don’t think is minimum wage even for ‘tip’ based employees.
So, you can edge over effective minimum wage if you have a fuel efficent vehicle, if you have an unusually large price difference over a short distance, if you’re getting a full tank of gas, if said gas is relatively inexpensive, and if you spend no time stuck in traffic or researching gas prices, and if you ignore the fuel you spend getting there.
I don’t think the ‘you weren’t working anyway’ argument holds. The statement wasn’t ‘there’s no possible way shopping around for gas can save you a trivial amount of money,’ it was ‘you’re paying yourself less than minimum wage to shop around for gas,’ and by extension ‘Shopping around for gas is not worth it, unless you put a very low value on your time.’ I’d consider roughly 1/3 of minimum wage a very low value of anyone’s time.
Both sound accurate to me. People who wouldn’t walk across a room to pick up a 50c coupon will drive 20 minutes out of their way to save 1.10 on a tank of gas. More, they will throw fits if they missed a price change costing them said $1.10, and blame said weekly $1.10 for all of their economic problems.
There are a few people who are legitimately and severely hurt by small fluctuations of gas prices. Independent truckers and farmers, for instance. The average driver, not so much. And by ‘so much’ I mean ‘in any significant way.’
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My own personal hypothesis, based off of years of running a gas station, is that no matter how intelligent, clever, and pleasant people are most of the time, the very act of buying gas makes them stupid, gullible, and angry for the duration of the transaction.
It’s all the gasoline fumes.
That’s not completely true. Gas isn’t just another commodity on the market - it has an impact on the prices of a whole bunch of other commodities.
If the price of chocolate goes up ten percent, then the price of candy bars and ice cream goes up. If the price of oil goes up ten percent, then the price of gasoline and everything that requires transportation to get to the store goes up.
I forwarded to a friend of mine that drives to Costco to buy gas when she doesn’t have anything else to buy and Costco is several miles out of her way.
This comic was boring to me. Yeah thank you Randall, but I don’t need you to tell me not to be irrational when buying gas.
You’ve never read xkcd before, huh?
Hmmm…but if you don’t go out of your way to buy cheaper gas, then the station that’s selling the more expensive gas will have no motivation to lower their prices, so they’ll always be more expensive. While if everyone went a few miles out of their way, they’d have to lower their prices, so the * next * few times you needed gas, it would be cheaper.
Real world examples: everyone knows the gas station right near the freeway that’s always 10 cents/gallon more expensive than the one down the street. Or the one right outside the center of town with no nearby competitors that’s 20 cents/gallon more expensive.
So there’s a bit more game theory going on here than just computation of opportunity value.
I disagree. Or, rather, I think there’s a lot of YMMV here.
Working is not just selling someone your time – sure, that’s part of it, but it’s not like you can walk into work and deliver your time. You actually have to do stuff. And usually (unless you’re self-employed or the CEO) it’s stuff other people are telling you to do.
Outside of work, however, you get to direct your own time. There’s a huge difference between someone ordering you to go 20 minutes out of your way to save $1.10 on gas, and you thinking that it is worthwhile to go 20 minutes out of your way to save yourself $1.10 on gas. (Note: here, I’m ignoring the cost of the extra gas you use up, which is a real concern.) If I think it’s worthwhile to spend the time that way instead of watching Wheel of Fortune, or whatever else it was I was going to do, then it’s a good use of my time – because I get to define what a good use of my time is.
Or, as a great philosopher put it, “work consists in that which a body is obliged to do, while play consists in that which a body is not obliged to do”.
So, of course, the most economical way to fill up your car economically is to convince your buddies that it’s a great privilege to fuel a car, and get one of them to pay you to drive it to the cheap station.
If Twain had posted that here, I’d ask him if he thought eating, breathing, and sleeping were work.
Well, he’s no longer obliged to do any of those things.