Monday, September 22, 2014

Special Offers

A couple of personal experiences the other day reminded me that some so-called special offers are not so special when seen under the harsh light of critical thinking.

As I filled my car with gasoline, I noticed on the pump a special deal from the gasoline credit card company.  If I used their card to buy my gas, I would get 5 cents off per gallon.  That sounded like a good deal until I remembered that the credit card I used, like several other cards in circulation, gives me 1% back every time I use it.  At a little over $3 per gallon, one percent is a little more than 3 cents per gallon, so now the gas-pump deal is down to less than 2 cents per gallon.  BUT like many other credit cards, mine gives me a special 5% bonus on gasoline purchases for one quarter of the year.  I was really getting over 15 cents per gallon back, which doesn’t make me feel good about the total I pay to fill the tank, but it does kind of blow away the gas-pump deal, doesn’t it?

If the pump could talk it might say, “Oh yeah, but what about the rest of the year.”  Well, Mr. Pump, let me tell you.  If I save 5% for a quarter of the year and 1% for the other three quarters, the annual average is 2%, that is (5+1+1+1)/4.  So, at over $3 per gallon, I still save an average of over 6 cents.  My card is free and I know of others with the same features, because they send me their promotions almost once a week in the mail.  Critical thinking certainly takes away the lure of the special offer.

As I drive away from the pump and turn on the radio, I hear a guy telling me that the stock market is bound to go down (sooner or later) and that it’s safer and wiser to send him my money to invest in precious metals.  The special deal here is that just for calling in, they will send you a gram of pure silver!  Wow, pure silver!  The problem is a gram is a very little bit.  The value of a gram of pure silver is easy to research and, though it sounds impressive, it is worth slightly more than a postage stamp.  Saved again by critical thinking!

So if these special offers are so easy to deflate with a little critical thinking and a little math that most people should be able to do in their heads, why do they persist?  The answer is clear.  There is not enough of it going on.  People don’t listen particularly closely and then they don’t do the simple math or simple research required to ensure that what is presented as a good deal really is.  When these tempting offers lure them in, they blame the advertisers or big banks or big whatever for taking advantage of them, calling for more government oversight and consumer protection instead of taking responsibility and admitting their error.  

Think of how much better off America would be if many more people thought like this, and we all taught our children to think like this.  Skeptical children picking apart their sales pitches instead of buying in and nagging their parents would be the sugary cereal, toy, and fast food companies biggest nightmare.

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