Basically, economics is about human behaviour, especially as it pertains to the marketplace. It gets more complicated with all the other myriad influences we include or attach such as money supply, production limits, trends, interest rates and all the assorted detritus humans attach to getting their needs filled. But, it is all basically just a simple fulfillment issue run amok, if you think about it.
I mean: a bear gets hungry, walks through the woods to the river and catches a fish. Eats the fish. Then the bear poops in the forest on the way back home to his/her cave. Feedback supply chain writ simple. In effect, that is what we do when we buy a car or a house or even a salmon. We just complicate the hell out of it….even the pooping.
And I might have just about done the same. Almost…..(I like to think that I am just a smidge smarter than the average bear…..we’ll see)
I awoke from my cave one day and wondered if I needed a different car. And here goes the new ‘economic thinking’ on THAT process: My current vehicle is a sound, well-running, 2004 Nissan Pathfinder that serves our limited needs rather well. We drive little but we drive over bad, hardscrabble roads, in snow, always fully laden and with virtually no support services in case of problems. Reliability has been our key requirement and it has been rather well met now going on for twenty years (the last eight of which have been with us).
The next requirement we have of our vehicle is carrying ability. The more space the better. But we have dogs and they are still growing – and our sturdy little mid-sized SUV is not. Should I move up and out? Should I get a full-size?
Looking at say, a 2015 Nissan Armada (bigger brother to the Pathfinder and eight years old), most of the vehicles advertised already have 200,000 kms on the odometer or more. My 2004 only has 197,000 kms. So, there appears to be no advantage on an actual wear and tear comparison, largely speaking. My car ain’t worth a Tinker’s dam but the 2015 Armada example is in the $20K range so there is a lot of cost associated with a few extra cubic feet of cargo space.
Then there is the longevity factor….not the car’s so much as mine. We drive less than 5000 kms a year. The old Pathy is not even at it’s half-life. It will go another 200,000 kms rather uneventfully (with regular maintenance and a few repairs). In other words, if the car doesn’t dissolve, I could drive it for more than 40 more years! Mind you, when you are 115 it is likely one has cut back a bit on their driving so I might be able to drive it for as much as 50 more years.
Put more succinctly, my current car will outlast me. In fact, actuarially speaking, if I live to a reasonably expected age of 85...oh, hell…make it 90…..that is only 15 years or 75,000 kms! My car, at 275,000 kms is just middle-aged by that number. Me? I am compost.
So, the conclusion is that it is just bad economics to get a different car at this stage of my life. Even better, the old Pathy will likely even see Sally out a further 15 years down the line when she is 100.
The dogs are just gonna have to squeeze up a little…..
Real economic consideration factors in depreciation. The revelation for me was that, in this case (changed perspective), the depreciation is not applied to the car, it is applied to me!