The perfect words here. ROI being higher by a few dollars, tops, with the
utility to you being far lower leaves you at a dead loss.
Venkat Inumella [08/09/11 13:04 -0500]:
On Thu, Sep 8, 2011 at 12:19 PM, Kragen Javier Sitaker
<kra...@canonical.org> wrote:
To compete with a 3% ROI from other possible investments of your capital, a
US$239 investment needs to earn or save you US$7 per year, even assuming that
People make consumption decisions to maximize utility, not a
hypothetical ROI, which should really only be used for financial
investments, not consumption spending. Since utility functions vary
widely between people, wearing flips-flops would be the optimal
decision for you only if the utility you derive from walking around in
$200 shoes (even when flip-flops may be applicable) is less than the
utility you get from the money saved buying $0.75 flip-flops.
it *never* wears out or depreciates. You can probably find investments with a
3% ROI in almost any economic times and at almost any scale.
Any number of hedge fund managers would beg to differ, I'm sure!
Venkat Inumella
