The answer is, of course, that the thief stole $100, but the store did not lose exactly that amount.
Lets take morality out of it, and say that instead of a thief, we have a raffle winner for a gift certificate for $100.
They come in, browse goods, purchase $70, leaving the other $30 on their card for another day. How much did the store lose?
That’s a complicated question, as it depends on what they bought. If they bought $70 in loss leaders, items priced low to get people in the store to buy other things, then it is possible the store may be out more than the $70 to replace the merchandise. Interestingly, the same happens if they pick something up off the clearance rack, where the store is selling it at or below cost to get it out of their inventory, only difference is, the store is not out the money to replace it, as it does not plan on replacing it. Different products in the same store have different markups, roughly correlated with what the costs of having the item for sale are. Eggs in a supermarket may only be marked up a fraction of a penny, but the market sells lots of them, so they don’t take up valuable real estate long. Vacuums over in housewares are going to sit on the shelf longer, and take up more space, so they need a larger markup to pay for their cost.
The store, in redeeming that $70 in credit, could easily have replacement costs of merchandise anywhere from $0 to $140 (and possibilities of further out of bounds), with the most likely store markup being around 100%, so it would, on a naive average, cost $35 to replace the merchandise.
So, back to the question, the thief obviously cost the store the $30 in cash sitting in his pocket, but what the store is actually out from his actions is far more variable.
Imagine this scenario… Guy walks into a store, notes that the till is open, snags a $100. Goes to the back of the store, and behind all the other merchandise, is a peice of crap merchandise that no one would ever buy, and it is taking up valuable space. Guy offers $70 for it, and hauls it away. Guy then comes back around lunch, and offers to buy all the 6 of the staff members a $5 lunch, a perk the business usually pays for.
Break it up into parts. Imagine that the thief stole $100 from store A, and then went to store B and spent $70 of it and received $30 in change.
The actions in store B are 100% legal. Zero loss from that store’s POV. It was just a regular transaction. Store A lost $100. The analysis doesn’t change at all if store A and store B are the same store. The total loss is exactly $100.
So, let’s look at this rare and unusual word “lose”, as found in the sentence “How much money did the store lose?” How many possible interpretations can we think of for it?
To be deprived of something. This amount’s $100.
To be looking for something and can’t find it. This amount’s $100 too.
To have departed the building. This amount’s $30, if we’re only talking cash.
Eating negative profit. This amount’s not quantifiable with available data due to not knowing the sold items’ profit margin.
It’s probably worth noting that nobody associated with the store would use definition 3, because it’s silly. Any of the other three definitions might be used - the first while speaking of the event as a theft, the second while speaking of the event as a reconciliation discrepancy, and the fourth while speaking of the day’s total impact on the store’s financial balance. (Though in the latter case you’d also be lumping in all the transactions and events of the day, since there’s otherwise no reason to lump the crime and the sale together.)
Only if you don’t count the costs of selling the goods, and the costs of replacing the goods, or any of the other costs associated with running a business.
If both stores have identical products, both at a 0% markup, then the loss would be exactly $100. In any real world scenario, the actual loss would be different.
Put it this way, in the two store model, we can all agree store “A” lost $100, but can we say that store “B” profited by $70?
Finally, plenty of stores do offer discounts and giveaways of gift certificates. If giving away $100 gift certificate is the same as $100 bill, then why do they only give store credit?
By that logic, you can steal to your heart’s content, and until the store owner is back to the dollar amount he started with when he first opened his business, he hasn’t lost anything. Those other dollar amounts are important to accountants and economists, but they’re not morally or legally relevant to the case of theft.
Businesses exist to make profit. The fact that your theft is partially made up by profit from elsewhere doesn’t mean you didn’t steal, or that your theft is less costly. And stores want your business, sure, and do things to attract business, like give away prizes, coupons and gift certificates. But that doesn’t mean buying something from them is charity. A transaction where you exchange money for goods is not a donation.
Stealing from a store and then buying something from them is two separate actions. If you bought from a store, you wouldn’t consider that a gift, right? So why would you presume that buying something with money you stole from them partially makes up for the original theft?
Some of this has to do with perspective. You wouldn’t have spent $70 on something if you didn’t think it was worth more than $70. But they wouldn’t have sold it for $70 if they didn’t think it was worth less than $70. That difference in perceived value is where wealth is created. We both come away thinking we got the better end of the deal.
But the perception of value doesn’t change the fact that the objective market price of the thing was $70, and therefore in a moral and economic sense, the good sold and the $70 in cash are interchangeable. Losing one is the same as losing the other. In a moral sense if not a private subjective sense.
This is getting at the proper way of thinking about the problem. Even better is to imagine that the legal purchase is made by someone entirely different from the thief. I think the construction of the problem with one person doing both steps is what confuses (some) people.
Rewrite it like this:
A random individual comes into a store and takes $100 from the register, unbeknownst to the clerk. A second random individual comes into the same store and buys $70 worth of stuff, paying for it in some unspecified way (cash, debit, credit card, whatever).
How much did the store lose to theft? The second person’s transaction is completely irrelevant. The store lost $100. Full stop.
No, that’s not following the logic at all. All I am saying is the replacement costs and the costs of selling goods are not perfectly labeled on the price tag. I did not, in any way, say that the owner had not lost something, I simply said that the owner had not lost exactly $70 in the costs of replacing merchandise. I even acknowledged that under some circumstances, the owner could have lost more than $70 in the cost of merchandise, which would mean the store is out more than $100.
Those other dollar amounts are not important to accountants or economists, they are important specifically to the store owner, and how much he is actually out. The reason that I used a gift car example was so that you could focus less on the moral and legal aspects of the theft, but that seems to be all that you are focused on, so I reiterate the very first line of the first pot I made in this thread,
So, continuing to focus on the thief is important to police and lawyers, but not relevant to the amount of money the owner is actually out.
Never said it was, just pointing out that businesses do give giveaways, and they do account for what that costs them. I have no idea how you took from my point that businesses account for costs like promotional giveaways as thinking that businesses operate on charity.
Economics. If I take 100 from you, and then I give you 70 back, then you are only out 30. If the thief bought an object that no one else would have bought, and only bought it because he had that money, then the store doesn’t lose anything on that sale, and just gets the $70 back. If he bought something that cost $35 to replace, then the store is only out the $35 to replace, not the $70 that was the price.
Which is why I first stated that the thief stole $100. Full stop.
Then I looked at it in a way to remove the moral outrage of a thief getting something with the giveaway.
If all you are going to go on about is the moral sense of the loss, then I am not sure that there is a productive conversation here, as I already said, long ago now, that that “moral” loss was $100. Now I am talking about the actual amount of money that the store is out because of these actions, which may be more or less than $100, but is unlikely to be exactly $100.
At the end of he day, after all necessary stock has been reordered and paid for, how much is the store out? Not $100.
Only because you have declared the second person’s transaction to be irrelevant. If it is not irrelevant, then it is. If the thief did not have any money, and therefore would not have bought anything at all, then the fact that they stole the money in the first place has relevance to them spending it, just as someone with no interest in your store can be enticed into buying something with a gift certificate.
Okay, lets turn this completely around. Lets say I have an object that cost me $500 to put in the store. I am selling it for $1000. After sitting in my store for a few years, it hasn’t moved, and I’m too dumb a storekeeper to mark it down.
So one day, a guy comes in, sees that object, sees he’s got $900. So, he steals a $100 out of my till, and pays me with it, along with 9 other benjamins.
I’m still quite firmly of the opinion that inventory costing is outside the bounds of any reasonable analysis of this problem. But if people insist on dragging it in, I’m willing to play along and argue it back out.
You, the store owner, steadfastly insist your item is worth $1000. So steadfastly you haven’t even so much as offered a discount on it for years! Clearly the item must indeed be worth $1000 then. This fact is backed by the fact you can’t sue a company for selling things at a profit - the item is worth its sale price, whatever that is, so the receipt of that amount of money in exchange for it isn’t considered fraud.
So you lost $100. And probably also incurred emotional trauma from being separated from your precious possession.
$30 plus whatever money the store could have received for the merchandise. You cannot assume the merchandise would have sold for $70; it is possible, for example, that it would have still been there until put on sale, in which case, the store lost $30 plus the sale price.
I will agree it has no bearing on the culpability of the thief. They stole $100. If I were a judge or prosecutor, and they said, “But I spent $70 of it in the store…” that would give them no leniency.
The bearing on the cost to the store, however, does need to include costs.
Ah, here is where we differ in perspective. An item is not worth what someone is willing to sell it for, an item is worth what someone is willing to pay for it. If no one is willing to pay 1000, but someone is willing to pay 900, then it is worth 900.
Why would you sue a company for selling at a profit? You decide whether or not something is worth a price, and you decide whether or not to buy it. The only time when you may have to pay more than what you think is a fair price is price gouging during disasters, where the free market no longer functions, and in that case, you can sue a business owner for overcharging.
Nah, I gained $400 in profit, plus freed up $500 in capital, and cleared out space to put something else in that hopefully will sell better. I could have made another $100, if the guy had paid the full price, but at the full price, no one was buying.
Turn around again, removing the morality of the equation, and call it a $100 gift certificate that I gave away that he used to buy my unselling monstrosity. Am I still out $100? If not, how is it different (other than morally) than if my $100 give away was not a voluntary contribution on my part?
Let’s put it this way, do you think that giving away a $100 gift certificate is the same as giving away a $100 bill, cost wise, to the store?
The store lost $30 + the inventory cost of the merchandise. I get that the puzzle writer is attempting to formulate a version of the “missing dollar paradox”, but it’s a terrible formulation.
Things do not have an inherent price. Things are worth whatever people are willing to pay for them at the particular time they are purchased. Just because something is worth $1000 to a customer at some point (or set of points) in time does not in any way mean the same thing is worth $1000 to the store owner, or to a different customer, or whomever.
Says who? I mean, yes, if the problem said, “how did this entire series of events effect the balance sheet of the business”, then yes we would have to account for the cost of the item using the costing model the business used, as well as the employee’s wages and so on.
But the problem doesn’t say that. It doesn’t talk about cost. It talks about loss.
Here, I’m no lawyer, so you tell me: The line dividing petty theft and grand theft is $400. If you steal an item priced at $500, but which was acquired by the store for $350, do you imagine you’ll be charged with grand theft or petty theft?
If the buyer determines the value of an item then I could walk into car dealership, toss a dollar on the table, and take off in a new Ferrari. (Without them calling the police on me, I mean.)
This is, of course, nonsense. And let me give you another example.
I’ve written a book. It took me a hell of a long time - months of time just on the writing alone, I’m sure. Multiply that times the worth of my time - which (by your own logic) can be determined by looking at what my dayjob employer pays me, then my book is worth several thousand dollars, easily.
However, I have decided to sell an ebook version of it for four dollars a copy.
How much would you say an ebook copy of my book is worth? Thousands?
(‘freed up $500 in capital’? )
If I’m understanding this correctly, if I were to go to your house and steal literally everything in it, you would have lost nothing because none of your stuff had worth because nobody was buying it, and I would also have done you a great favor by freeing up so much space for you.
An extant gift certificate (one ‘in the wild’) is counted as a liability on a company’s balance sheet, which they’d be very wise to keep track of for a while on the off chance the customer actually comes back and redeems it. However as long as the prospective customer hasn’t used the certificate the company still has the money, and if we’re just counting cash, hasn’t lost any of it. This differs from just handing over the money directly, obviously - if you do that you are down $100.
See, now here you are bringing up morality again, and I’ve already said a few times now, that yes, the thief stole $100. This is a question of what that cost the store.
SMH.
Okay, so you walk into a dealership, and they have a rusted out 1973 ford pinto selling for $1,000,000. Is that what it is worth? No.
I suppose I can be more clear, it is worth what someone is willing to pay for it, at the marginal rate.
My point is that it is not worth more than anyone is willing to pay for it.
You are misunderstanding the most basic of micro-economics here.
This is going into a whole new realm, away from physical objects and into digital, but it actually makes my point even clearer to you.
It is worth exactly what people paid for it. It may be worth thousands of dollars to you, but if you only sell one copy, then its value is $4. If it sells a million copies, then its value is $4 million.
You know what that has to do with what that book is worth to you? Absolutely nothing.
Right. I had invested $500 in that merchandise item. If I sell it for $500, then I have freed up that capital to buy something else. This is a basic micro-economic term. If I sell it for more, I free up the capital, plus I make a profit. If I sell it for less, then I take a loss, but I still freed up capital that can be used for something that may make me more money.
Sometime, go look at a clearance bin. Most of the stuff in there is priced at or below cost. The reason that they do that is the specific purpose of freeing up capital so that they can buy other things to make money.
Well, that should be your first clue that you are not understanding me correctly, as I said nothing like that at all.
Okay, so a $100 gift certificate that is used in the store then.
We’re in the middle of a hamfisted argument over how to determine the value of an item. You’re making the philosophically and economically unsound claim that an item is never worth more than somebody is willing to pay for it, which is wrong, and I have an inborn temptation to fight wrongness.
But you know what you’re not arguing? That the item’s value is its inventory cost.
And do you know what that means? It means that in the original problem, we agree that when counting the “loss” to the store, the value of the items sold for $70. Not their inventory cost of $48.50 or whatever. Just straight $70, because that’s the price they were last sold for. And similarly in your example the item in question is worth $1000, because that’s what it was sold for. Sure, the buyer robbed somebody to get the money to pay for it, but the item was sold at full price.
Not that the value of the merchandise sold has anything to do with the amount of the loss anyway - the store didn’t lose the merchandise, it sold it. But still, it’s nice to dismiss the inventory cost factor.
It’s clear to me now–as it was before I posted, mind you–that if the problem were different, that if, for example, it didn’t ask how much money did the store lose, or if it gave some different scenario–the answer would be different.
But in this particular case, being pedantic, the money that the store lost was $30. Any other answer is conflating money with value, or is hypothesizing about loss.
That’s only in the narrowest possible definition of “lost money”. If the store operates like most stores, it paid for the goods sold – with money.
To take another scenario, if I buy something for $100 at a store, then as I’m walking home a thief takes it from me so that I’ve lost it irretrievably, how much money have lost? On the very narrow view, I’ve lost no money, but in reality I’ve lost $100, since I am $100 poorer with nothing to show for it.
Security is clearly the issue here!
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