Creating Your Own Deflation

Tyler Cowen was on a podcast with James Altucher and at the ~25:30 mark, Tyler comments how “We can create our own forms of deflation as individual human beings.

They list a few examples:

  • Moving from the Upper West Side to Nashville
  • Getting a dog – high upfront costs today (and to be fair, plenty of maintenance costs…) but for years on the margin you will swap expensive nights on the town for free nights hanging with your pup
  • Playing chess
  • Not purchasing the weird old multi-$100 hardcover academic book on Amazon

My considerations of inflation have been limited to discussions on index components, labor/wage dynamics, and menu pricing. I liked the exercise of placing preferences surrounding good, services, and activities on the inflation/deflation spectrum.

What are other examples of inflationary/deflationary preferences? And what happens if you place inflation/deflation towards the center of your personal aesthetics? And if you do, which way on the spectrum should you optimize towards?

  • I bought a nice road bike during the pandemic and now spend hours a week riding it that might have otherwise been spent on spin classes (the upfront cost impacts the breakeven “deflation point” but still…)
  • Can you rank games on a deflationary spectrum? Settlers of Catan has expansion packs. A deck of playing cards provides fun for years. Aforementioned chess depends on just how long someone sticks with it. Is Dungeons and Dragons the ultimate deflationary game?
  • Wikipedia is deflationary for infovores
  • Are libraries more deflationary than book stores?
  • From an inflation viewpoint, is it better to go out for dinner with friends or invite them over to cook?
  • Drinking has to be inflationary
  • Is religion an inflationary or deflationary force?
  • What about dating and marriage? And at what phases?
  • AI and ML?
  • Fashion rentals company are getting more and more popular (and then you have places like Esty and Ebay):

*****

Some of these are just examples of underutilized fixed assets being squeezed out of the economy. But others are aesthetic choices about how to spend your time. To the extent you can aspire to shift your preferences, which way should you attempt to move them?

I can imagine a nice deflationary life where I stretch my current assets to go very very far. But I suspect that might not lead to sustained happiness. And at the aggregate level my intuition is that would tend to decrease societal progress.

Be it because of some sort of mimetic desire dynamic or incentives in the job market or something else, I think we are probably a bit happier individually (and on the whole wealthier as a society) with inflation “at or around 2 percent.” But don’t let that hold you back from moving to Nashville!

10 thoughts on “Creating Your Own Deflation

  1. Pingback: Friday assorted links - Marginal REVOLUTION

  2. Patrick Morris

    Wonderful advice on the road bike, a quality bicycle it can bring hundreds of hours of enjoyment without much expense beyond a new tire every now and then.

    Like

    Reply
  3. Pingback: Friday assorted hyperlinks - Marginal REVOLUTION - My Blog

  4. Pingback: Friday assorted hyperlinks - Marginal REVOLUTION - Forbes Best

  5. Pingback: Friday assorted hyperlinks - Marginal REVOLUTION - daxsenbusiness.com

  6. Pingback: Friday assorted hyperlinks - cryptomarket24news.com

  7. Pingback: Deflationary Individualism – cafebedouin.org

  8. chantelle oliver

    I lived off of $5 a month my first year in university and continued this type frugality all my life and retired at 35. Your list has many of them, for example I did not even try alcohol or drugs and I have never bought new clothes just thrift. When I went out I never took any money with me so I never could spend. I’ve never bought any new furniture. I never ate in a restaurant and paid until I was in my late 30s (this is where being a woman helps). I bought a house and lived in the dining room and filled the whole house with people. Paid it off, repeated. I have the best life now; I travel and have no stuff and am not an individuated consumer. I am horrified how people are eager indentured servants for ideology.

    Like

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s