Thoughts on $500 Per-Pound Cheese

By - December 2, 2014

I was recently reading about a cheese that cost $500 per pound. At the moment I can buy a decent cheddar or Swiss cheese for $5 per pound. Is the expensive cheese better for you? There is no research on this that I could find. Does it taste better? Maybe, although it seems that with many expensive cheeses the taste is worse at first bite. Only after we accustom ourselves to them do they seem to taste better. These are what we call acquired tastes.

(Flickr photo by Smabs Sputzer)

Now, if we have to train our bodies to like the taste, and there is no additional health benefit, why would we pay 100 times as much for something that is functionally the same as the alternative? In fact, wouldn't it make more sense to train ourselves to like the healthiest and/or cheapest alternatives? Since the training of our taste is involved, it seems that in the end we will derive just as much physical pleasure from the one or the other.

This goes well beyond cheese or even food, of course. We often buy things that cost more for no additional objective benefit. There has to be some perceived benefit, of course, or we wouldn't pay more. So what is it?

There are a couple reasons to pay more for things that are functionally the same as other things. The first is essentially psychological, and arrived at by way of culture and conditioning. It is ego inflation. This is achieved by impressing others. It may also produce a feeling of being more important because you can buy such a thing. It can also help you create and/or uphold a specific self-image.

It seems likely that all such ego inflation is a net negative in terms of true happiness. The creation of an identity that must be sustained through impressing others and through things outside of oneself in general causes the stress of trying to maintain this fragile "self" and the pain of loss when this effort fails at times (as it must). It is clearly irrational to pay too much for this "benefit."

Another reason we're willing to pay too much for something when there is a cheaper alternative is for variety. This seems like a more natural motivation, since there does seem to be something in humans that requires some variety of experience. But there are two factors to consider here:

1. Anything new produces only a temporary change in experience. We quickly become accustomed to it and so it quickly loses its "newness."

2. This "newness" effect can be found in many ways. More to the point, we can find variety in cheaper ways.

So we might enjoy a new cheese for a while, but if we are eating it every day we soon find no more enjoyment from it than from any other cheese that we really like. This means there may be a benefit in trying new and expensive things, but we might pay too much for having the experience regularly if there is a cheaper alternative that is functionally the same. The question we are left with in that case is:

How much is it really worth to have the occasional new experience?

The answer to that is unique to each individual. My guess is that for most of us it would be irrational to spend $500 on a pound of new cheese since we might get the same experience of "new" from trying a $30-per-pound variety.

Of course there are functional differences in foods and in many things where prices vary widely. Dark chocolate, for example, is more expensive than milk chocolate and is an acquired taste for many people, but it's also healthier for you. Cars too have real differences in quality that are reflected in the prices. This brings up the question of how much more we should pay for a given set of quality differences. Again, this has to be answered on an individual level, depending on a person's unique character, body and certainly income or assets.

It is sometimes easy to see where motivations come from in the extreme examples. Consider that $500 cheese again. To the extremely wealthy person it can just be something new to try. But of those customers to whom $500 is a significant amount of money, how many do you think buy it anonymously and eat it in private, telling nobody? Not many. Impressing others is very likely a big part of the motivation for most purchasers.

In most areas of economic life, though, it is not so easy to see through people's motivations. There is a difference in quality between a $100,000 car and a $10,000 one, for example, yet how much is a given buyer motivated by those true benefits and how much by "ego benefits?" That's not very clear in many cases, and not important to know except in one case: your own.

Now we arrive at the real lesson in the $500 cheese: The importance of self-awareness, self-observation, and self-knowledge. If you can agree with me that feeding the ego is not healthy (believe me, it does fine on any scraps it can get), then you have to ask about your personal mix of motivations in your economic decisions. Let's look at a fairly typical example of how wrong we can go if we do not watch ourselves carefully.

A man gets a promotion or a better job and his income goes up 50%. He and his wife have always talked about getting a better car and a better house, and now they have the means. They buy a $40,000 SUV and house in the most prestigious neighborhood around. Of course if you ask people about their impressive homes, they'll have reasons for their purchases that sound very rational, and in a given case these might even be true.

In this example, though, we'll say that the house is not functionally very different from the one they had. It doesn't have the extra room they needed for when family member visit. It doesn't have a better office for small side business they run from home. It has some nicer amenities, but is primarily just in a prestigious neighborhood that they dreamt of living in. They are sure to tell their friends all about it. In the meantime, after their initial enjoyment of their new home, it is soon no longer new and they use it in the same ways as the other.

The SUV gets them to work and to the store in the same number of minutes. They never use the four-wheel-drive, nor do they need the high clearance since they stick to paved roads that won't damage their "baby" as they call it. It has a better stereo system, and gets more compliments from their friends than the other car. Of course, they could have had a better stereo put in a car that cost $16,000 instead of buying a $40,000 car.

The net result? Six months later their lives are essentially the same, except they have more debt than ever, and so they feel the need to cling to their jobs even when they don't like them. The things which really brought them more comfort and pleasure, like taking little trips together or going to the movies, happen less often, because they are working more and actually have less money left each month after paying the newer higher bills and debt payments. More stress and less enjoyment. Are they richer? Their egos are.

Of course it's none of our business what anyone else buys, but that doesn't mean we can't recognize the truth about unhealthy motivations. And should we all buy the cheapest of everything as long as it works? No. And perhaps even incredibly expensive cheese can be perfectly rational in a given context (think Bill Gates).

What I'm suggesting is that we look for the difference between what is "functional" and what is only of concern to the ego or created self. Otherwise, money not only doesn't make us happier or healthier or safer, but actually works against us. That, of course, gets us right back to self-awareness, self-observation, self-knowledge -- and $500 per-pound cheese.

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