Convenience or cost?
You’re planning a week away and shopping around for flights.
Before tackling the decision of how to get all the clothes, shoes and various shampoos you need into a single bag, one of the more pressing conundrums that crops up is which flights to take. Do you sacrifice convenience (think, extra stopovers or a departure time that is eye-droopingly early) for a cheaper deal. Or pay the higher price to get to your destination more quickly or at a happier hour.
What’s the opportunity cost to you?
At one level, it comes down to the rate at which you value your free time and how much free time you have.
For someone with a lot of spare time and relatively low earnings, it might make good economic sense to take the flight with the stopovers to get the EUR100 discount but it might not make sense for a time-poor, cash rich individual.
At another level, it comes down to the types of activities you enjoy doing.
The opportunity cost of the longer travel time might be particularly high if you hate flying – or very small if you actually enjoy the experience of transit.
Imagine yourself after the flight
In his Ask Ariely column in the Wall Street Journal (reproduced here), Predictably Irrational author Dan Ariely addresses the topic of whether it’s better to book a cheaper, less convenient flight – or shell out the premium for a more luxurious experience.
Ariely points out that when booking, it makes sense to try to put yourself in the state that you will be in at the time of the flight (known as a “hot state”) – not at the time of booking (known as a “cold state”).
After the flight, you might be tired and on your way to an important occasion (in the example Ariely is given, a wedding), so the savings might be viewed in a different light in that hot state.