Economist Milton Friedman famously divided spending into four types:
- I’m spending my own money on myself, in which case, I want to get the best combination of price and quality. This is the sort of spending that middle-aged women do on expensive handbags.
- I’m spending my own money on someone else, in which case I mostly care about price. This is why you get so many books you never read as gifts.
- I’m spending someone else’s money on myself, in which case … WEEEEE! This is the kind of spending that employees do on expense accounts. (Though not, of course, myself. I mean a generic employee with less moral fiber than I have).
- I’m spending someone else’s money on someone else, in which case … ah, who cares?
Megan McArdle, “Republicans Should Save These 3 Unpopular Parts of Obamacare”, Bloomberg View, 2017-01-05.
December 21, 2017
QotD: Milton Friedman’s four types of spending
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