Relative values

Jul 8th, 2009 | By | Category: International

“Do you think you could help me?” asked the lady. “Do you think I have to buy a whole box of nails?  I only wanted four.”

The shelves were filled with plastic boxes containing nails, screws, hooks and miscellaneous other items.

“I only wanted one hook, but I think that I shall have to buy a box of four”.

The lady looked at the box of hooks in my hand.  “Why don’t you just take one of those display ones that is taped to the front of the shelf?”

“I think they need a barcode in order to check things out at the counter”.

“I suppose so”, she said, “I’m sure some people just put things in their pocket”.

“I can’t imagine anyone doing so”.

“You know very well they would”.

Would someone sufficiently motivated to drive to an out of town DIY store really sell their soul for the price of a coat hook?

The smiling assistant checked out the box of four coat hooks – €1.19.

Are four coat hooks worth €1.19?

What is €1.19?

One-fifth of the cost of a bottle of cider in the city centre; two-thirds of the cost of this morning’s newspaper; four-fifths of the cost of two litres of milk.  The full cost of a litre of petrol.

Maybe it’s not so much.

I converted it into Rwandaise francs, the currency I was spending last week.  At 750 francs to the Euro, €1.19 is 900 francs.  After the price rises of 1st July, it would buy just over a litre of petrol, which was selling at 825 francs a litre. It would buy nine 100 franc mobile phone top up cards.  It would buy six litres of milk at the price charged in the villages, but only four litres of milk at the price in the cities.  In a country where income per head in 2008 was $370 dollars, what would it represent.  If there were three dependents for each wage earner, then earnings would be $1,480 per year, or $28 a week.  $28 is €20 a week, €3.33 a day for a six day week.  €1.19 is more than a third of a day’s pay for a Rwandan worker.

It would take four hours work in Rwanda to pay for the box of four coat hooks.  Maybe it is so much.

Perhaps it is not practical to begin to convert everything into different currencies; production costs vary hugely and staff have to be paid proper wages.  But it was sobering for a moment to realize how much money is thrown away as no more than loose change; to realize that the pointless and casual expenditures can mount up into huge sums of money for the world’s poorest.

How much is €1.19?  See it as four hours of sweat, and it looks very different.

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  1. I suppose the value depends on how much we really need the item. Good to have you back.

  2. One of the first things we were taught in economics was the concept of ‘opportunity cost’; if you spend your money on one thing, you forego opportunities to buy other things. When you work out how much you pay for something, and what other things you could have spent the money on, it is quite surprising sometimes.

  3. Thank goodness there are still a few old fashioned shops around. In Crewkerne in Somerset there is a small Alladin’s cave of a shop where it is still possible to buy individual items, it does a roaring trade

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