The Availability Heuristic and Demand

[Bryan Caplan]

My wife was so swamped at work that I wound up paying our bills for the 
first time in years.  As I was writing the checks, I began to wonder: 
After seeing the bills, would my consumption of e.g. utilities 
systematically fall?  It seems at least plausible that the act of paying 
the bills makes you more likely to think about the expense of various 
actions, and therefore more frugal.  This bears more than a family 
resemblance to the availability heuristic, where people estimate 
probabilities using the ease of thinking of examples.

RE tells us, of course, that paying the bills and becoming more 
price-conscious should have no systematic effect on consumption.  Some 
prices will be higher than you thought, some lower.  The contrary 
theory, though, is that we implicitly think of a lot of things as free, 
unless direct experience reminds us of the opposite.
--
                        Prof. Bryan Caplan
       Department of Economics      George Mason University
        http://www.bcaplan.com      [EMAIL PROTECTED]

        "Infancy conforms to nobody: all conform to it, so that
         one babe commonly makes four or five out of the adults
         who prattle and play to it."
                     --Ralph Waldo Emerson, "Self-Reliance"