Justifying the Cost of an iPhone

Cost of Living
Justifying the Cost of an iPhone

By M. P. DUNLEAVEY
Published: September 5, 2008
WHAT did people spend their money on before the advent of Amazon.com, Best Buy and their electronic ilk?
These days, you’re considered in a state of arrested cultural development if your television doesn’t stream satellite radio, navigate the Internet, contain a built-in digital video recorder and send wireless programming to your cellphone — all while soothing a fussy baby in the car.
I don’t know how any of this stuff works, and I don’t want to pay for it. Yet, I am on the brink of buying an iPhone.
While my inner 17-year-old is all for it, my financial conscience is protesting on the grounds that I can’t justify buying yet another device that soon will be upgraded or rendered obsolete — forcing me to have this debate with myself all over again next year.
Besides, I already have a laptop, a cellphone, a P.D.A. that was built in the stone age (circa 2005). And my husband has an iPod, which I gave him for his birthday a couple of years ago. Ever since that acquisition, I told myself that we were more or less functioning in the modern era, even though I refused to learn how to text. (Because, until you get 800,000 free text messages a month with your package, what is the point?)
Thus far, I have also resisted the allure of TiVo through the astounding feat of completely ignoring what it is, how it works and why the benefits might be so glorious that I would allow those TiVo people to suck cash out of my bank account each month.
And that’s the crux. Not only would I have to pay about $200 for the iPhone — in all its sleek, improbable beauty — I would have to sign up for yet another perpetual expense: using the AT&T 3G network for $30 a month, or whatever the actual cost is when you include taxes, F.C.C. surcharges and all the hidden fees that lurk in these bills like tiny money-eating parasites.
We already pay $9.99 a month for Netflix, and rarely use it, with the result that on the banner evening that my husband and I do watch a movie, the actual cost is $170. (We are the parents of a 2-year-old. Who has the energy?)
But the real financial pitfall when considering the iPhone is the tendency to adjust my mental accounts to rationalize paying for it.
MENTAL accounting is a relatively new construct in behavioral economics that helps to explain why people’s financial behavior often literally doesn’t add up. For example, one justification for buying an iPhone, in my greedy pea brain, is that I don’t even own an iPod myself, not so much as a Nano. (Feeling sorry for oneself also helps.)
Obviously, the nonbuying of one device does not generate the cash necessary to buy another, but most people’s mental accounts are quite flexible, said Dilip Soman, a professor of marketing at the Rotman School of Management at the University of Toronto.
Professor Soman was co-author of a study called “Malleable Mental Accounting” with Amar Cheema, an assistant professor of marketing at the Olin School of Business at Washington University in St. Louis. The study was published in The Journal of Consumer Psychology in 2006.
According to their findings, not only are many people adept at Enronlike accounting maneuvers to justify purchases, they are more likely to buy something when they can mentally assign that expense to more than one internal account, Professor Soman said.
I have to agree because, using the fluid calculator in my mind, in addition to my $200 surplus, future funds may also be available as well, given that I will need a new phone when my dastardly cellphone contract runs out in December.
On top of which, hanging around my 18-year-old technophile nephew last month may have sealed the deal. He had just gotten an iPod Touch, which has much of the functionality of my coveted iPhone. Watching him flash through its applications touched upon a deeper, perhaps primordial instinct — the fear of being left behind by the pack.
Even as I write, Apple has announced a coming product-related event. I shudder to think. At a certain point, when your gadgets can’t talk to anybody else’s widgets, you might as well be living in a cave. Besides, I can’t let myself be outdone by a teenager.