A little bit behavorial economics, a little bit socialist treatise, Shell's book discusses low prices, Americans' love of low prices, and the effect that the pursuit of them has on the world in industries ranging from food to clothing to furniture and to just about everything sold in places as varied as Ikea, Wal-Mart, and Red Lobster.

The book argues that cheap, poor-quality items push well-made items out of the market, and that workers willing to work for what little money is available to pay them make better paying jobs harder to come by. Her implied solution is that we should all insist on quality and insist on paying more for it, and that all our lives will be better off in all aspects if we have fewer, but better things.

Two questions nagged at me as I read Shell's relentlessly haranguing book, however: 1) why should consumers be *forced* to buy expensive items? Sometimes cheap will do (remember those chartreuse shoes you had to buy for your best friend's wedding? $29.99 at Payless vs. $300 Manolo Blahniks?). Sometimes it's even preferred. 2) Just because the consumer willingly forks over more for an item, what guaranty is there that the money will go into the pocket of the workers, rather than into the hands of the company executives or stockholders? At one point Shell seems to dismiss the idea of buying locally from the manufacturer when possible, but this - which may also be pricier - seems to be more likely to get money into the hands of the "workers" than agreeing to give the Tommy Bahama company a few more dollars per shirt, expecting they will use the money to raise the wages of workers in China.

In the main, I do agree with many of Shell's premises. Unfortunately by the end of the book, which was so long, so shrill and strident, I found myself resisting her arguments and wanting to go on the offensive to defend my right to buy cheap things. That, as well as believing that the problems of the world go well beyond cheap lobsters and uncomfortable particleboard sofas, kept me from giving this book a better rating. ( )

Discount culture is not a product of warped consumer psychology or of elaborate neuro-scientific investigations. Shell misdiagnoses the cause of discount culture, and so cannot give a useful prognosis for a cure.

And it is remorselessly American in a very parochial way. ( )

I have to admit it took me a little bit to actually get into this book . Now that I am finished I think the historical elements at the beginning may be the weakest section. The book is somewhat depressing as it really offers no solution -- simple or other wise, but I think it poses some really important questions and provides plenty of evidence that the real cost of the cheap stuff we seek out and buy is a price we will not be able to hide or to continue to pay for long. ( )

Having only recently bathed in the glow of rosy optimism that is Chris Anderson's Free, Cheap is the cold shower guaranteed to give the reader pause for thought. Many things are certainly a lot cheaper in America than they have ever been, but it's not all affordable. For example, on page 157: Average household income in 2003 was higher than it was in 1971, Americans spent 32% less on clothes, 52% less on appliances, and 18% less on food. However, over the same period mortgage payments have increased 76%, health insurance 74%.
Things are not cheap where it counts, and those things that are cheap are not sustainably so. Chapters 4 to 9 reveal the hidden costs - to skills, wages, the environment, human rights & culture - of cheap.
Let me add another statistic not cited by the author: In 2007, 62% of all bankruptcies were medical ; 75% of these medical debtors had health insurance. Staggering.
You would need half a dozen books or more to do this subject justice (for example, Eric Schlosser's Fast Food Nation represents a fuller treatment of the issues raised in chapter 8, "Cheap Eats"). Thankfully, Ellen Ruppel Shell provides extensive footnotes and references for those wanting to explore, say, the fascinating insights gained from the psychological studies of consumer behaviour in the excellent chapter 3, "Winner Take Nothing".
But is there a solution? How to arrest price's race to the bottom, dragging living wages and the environment with it? Even if the huge economies of the developing world do become bastions of democracy and rule of law, there is still human nature to contend with (again, see chapter 3).
By way of a remedy of sorts, Shell takes her cue from Adam Smith's ideal of "enlightened self interest" , and gives us the closest to a working example - on a large scale - in Wegmans Food Market. The key to company profits seems to be investment in well remunerated and looked after staff, which in turns attracts and keeps customers. Qualities beyond the number on the price tag that support wages and profits. And I love the idea that not all Wegman stores strive to be identical in look and layout.
A more subtle point is made which, again, is worthy of further exposition. In contrast to the local marketplace of Smith's time (but still in existence in local markets such as the example of Haymarket on p. 220) -
"Discounters shroud their offerings, selling virtually identical products as different brands, and B-grade versions of national brands. Or, like IKEA, they hide shoddy construction - and questionable practices - with clever image making and design. The cheaper the goods, it seems, the harder retailers work to keep us from knowing about them, And the more narrowly we focus on price, the easier we are to fool."
I must agree with her on IKEA - on my first and last visit to an IKEA store, a particle board storage shelf snapped in two under gentle pressure from my hand.
Enlightened self interest, in other words, is impossible in a world of commerce where it is difficult to know where a product came from or the conditions under which it was manufactured. Therefore, if consumers cannot buy based on knowledge of product, then price alone becomes the determinate.
An excellent read, even if the ideal marketplace of Smith seems unattainable. Perhaps the user generated revolution of web 2.0 will assist in greater product awareness amongst consumers. Or does the promise of instant gratification via online bargains just compound the problem?
Either way, I hope this book stimulates some serious comment from the economists and consumers alike.

Quotes:
"The key to economic prosperity is the organized creation of dissatisfaction". Charles Kettering, GM researcher and inventor, cited pp.22-23

"Television advertising was particularly vital for the low service discount chains that, with no experienced salesforce to push product, relied on the customer to come to their stores pre-loaded with wants." p.26

"Economics is a religion. It assumes rational behavior and that people will do what is best for them. But like religion, this is only a belief; there is no proof." Daniel Ariely, cited p.69 ( )

This book is made of two different parts. The first part analyses low prices from the psychological, cognitive point of view. Why we are attracted by low prices, how we react, and so on. The second part analyses the reason for cheap prices, the implications and the costs. The two parts are loosely connected. The impression is to switch to a different book from a different author. While the first part tries to provide an objective and scientific perspective of the problem, the second part is taking a very strong position. While I agree with most of the ideas proposed by the book I’m a bit uncomfortable with this unusual way of mixing opinions and data.
Also the book is ignoring the price mechanism and psychology for online sales and prices. Ellen doesn’t even try to analyze the differences between the traditional buying process and the new different online process. I purchased this book hoping to find this type of analysis. Not only I work in e-commerce, I also believe the psychological mechanism activate by the online shopping and purchasing (e.g. on Amazon) are different from the mechanism governing the traditional retail shopping and purchasing (e.g. Walmart). ( )