Why Do We Buy Without Stopping When Prices Are Expensive?

The price of everything we can think of is increasing day by day. But besides this, queues are forming for a phone worth 50 thousand liras, markets, restaurants and stores are jammed. But why?

After the new iPhone 14 series went on sale in our country Queues in front of Apple Stores you have seen. So is the selling price of phones. Naturally, it comes to your mind: ‘Who will pay 40 thousand TL for a phone in this economy, that’s all’.

Or a partner is your friend’We say the economy is bad, but everyone is on the streets, a car below everyone else. He made some comments such as… Maybe you might even look around and be ashamed of yourself and agree with this thought. So really, how does this happen? Why is everything always getting expensive and Our economy is going through a troubled time. Are we constantly consuming and buying things?

No details, short, simple: how come we started saying ‘the economy is bad’?

iPhone 14 queue in Istanbul…

Many developments in the last few years, one after another, economic turmoil around the world. caused. The pandemic, the effects of cryptocurrencies and mining, the chip crisis, the energy crisis, and all these events, one after the other, have affected many economies around the world.

In addition, both in our country and in the world, political tensions also had negative effects on economies. Unfortunately in Turkey domestic-foreign policy dynamics and besides these, affected by many of the situations mentioned above, it entered an economically difficult period.

Everyone, without exception, started to feel these effects at any time of the day, from young people who stop by the grocery store and buy pasta with a bottle of Coke if they don’t buy anything, those who look for food in the market, those who go shopping for school needs and those who look after their home. because The value of the Turkish lira fell, inflation rose, life began to become more expensive…

Despite all this, there are both economic and psychological reasons for the crazy increase in consumption and purchasing behavior;

Before moving on to the psychological reasons, let’s take a look at the economic reasons through the explanations of an expert. Economist Mahfi Eğilmezexplained with a few articles how the market was still alive when the data looked so bad. Let’s briefly summarize these explanations;

  • The first and most critical economic reason is the concern of escaping the effects of inflation. The value of the Turkish lira continues to depreciate against currencies such as the dollar and the euro. This leads to price hikes in many products and creates an expectation that inflation will increase as well. Naturally, ‘let’s get it before everything gets more expensive‘, everyone starts to make up for their shortcomings, renew their old ones and even ‘make stock’.
  • ”Increase in consumption created by negative real interest rate”. Eğilmez explains this item as follows; No one on the street believes the announced inflation rates and they think it is more. As such, they act according to the inflation rate they believe in, and they find the interest rates given by banks to deposits and adjusted according to the announced inflation rates low. This means instead of investing in investment instruments with negative real interest rates in their minds. invest their money in real estate, automobiles, other goods and services, or in the purchase of foreign currency or gold. why is this happening. In short, instead of keeping the money in TL, spending it and turning it into a home or a car turns into a preferred ‘investment’ tool.
  • Another point that Eğilmez draws attention to is the effect of unregistered earnings on the situation. According to the data of 2021, Turkey’s informal economy is roughly one-third of the GDP, which corresponds to a figure of 250 billion dollars per year. If we need to open a parenthesis here and briefly define GDP; We can say that it is the economic measure of the market value of all the final products produced in a certain time period. Here is some of the amount not included in this measure Some of the non-tax gains come from illegal revenues called ‘black money’. is formed. According to Eğilmez’s statements, such money is ‘spent easily’ and the simplest way to ‘launder’ this money into the economy is to buy luxury cars and houses; making luxury consumption expenditures… This naturally ‘adds momentum to the market’ by affecting the increasing consumption and expenditures in the country.
  • Another reason for the movement in the market is that foreigners brought to the country and currency in circulation is described as. Real estate investments in Turkey have increased from many countries such as Russia, Ukraine, Iran and Iraq, as well as those who come as tourists and ‘activate the bazaar’. This, in particular, has a significant impact on the movement in the real estate market.
  • created by large investments such as bridges, highways, airports, and city hospitals in our country. In addition to the debt burden, there is also the employment part. The employment provided here also returns to the country’s economy as expenditures that mobilize the market.
  • Finally, it is thought that there has been an increase in spending on areas such as real estate and automobiles with the effect of the pandemic. Getting into debt and buying a car, People who sell their house and buy a garden keep the market moving.

There is also the psychology aspect of the job;

Negative changes in the economy affect the psychology of societies. This causes changes in purchasing behavior. The constant price increase, rising inflation and high cost of living come back to all of us as a perception that ‘if I can’t buy it now, I won’t be able to buy it again’. Our gigantic anxiety about being deficient, impoverished and unable to meet our needs It results in us wanting to buy everything from cat food to mobile phones as soon as possible.

On the other hand, shopping has an impact on psychology. Many surveys and studies conducted indicate that shopping has a positive effect on psychology. This positive effect is, ‘I’m not that poor, I can go out and have fun one evening’ ‘I can still buy a phone even if I owe myself a fee’ It combines with a relief effect that can be explained with sentences such as;

We have all experienced a similar situation; Our perception of expensive has already changed. Although we were surprised for the first few weeks, months, To go out of the market by paying 50 60 liras for a yogurt, a bread and a drink. we are not too surprised. Although the iPhone 14 is very expensive, it does not surprise us that it is ‘expensive’. Because we say that there is an exchange rate difference, there is a tax… This acceptance comes back as our ‘no pity’ when giving money to any consumer or technological product. We say ‘Well’. ‘‘In such an economy, we cannot find a phone less than 10 thousand TL anyway…’

Also, marketing tactics affect us more due to economic concerns. there is truth. While we are already focused on savings, sentences such as ‘Buy now, save 40%’ or organized ‘short-term campaigns’ affect us more. These ‘campaigns’, which intend to completely affect our psychology and mind and complete the purchasing behavior, easily affect our sensitive psychology and complete their task successfully.

The combination of all of these prevents us from turning to savings and savings, causing us to consume as if by fire, to queue for iPhones, to add that shoe to our basket, and to buy ‘not one but five packages’… What happens is our wallets, our future without savings.

Sources: Mahfi Eğilmez, Money Crashers, Harvard Business Review, The Conversation


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