It is not really news anymore that many package and product sizes have been shrinking in the US. I am mentioning it, though, as a reminder to double check your price:mass_or_volume ratios over time if you are gaming your groceries.
Ice cream hasn't been in half-gallon containers for ages, slipping subtly to 1.75 qts, then 1.5 qts for some producers (Breyers). My beloved Tropicana OJ has dropped its cartons from true 64 oz half-gallons to 59 oz. I have finally increased my price threshold for OJ from $0.05/oz. Quilted Northern just made its bathroom tissue substantially narrower, but it doesn't take me any more squares than before to take care of business, so it doesn't affect my ratios.
There was a television commercial a few years ago about a guy who got promoted for realizing his company could make a larger profit by putting fewer olives in each jar they sold. He was expected to continue increasing profits to keep his job. How he would continue was left open with the implication that he'll eventually have to think of something besides selling fewer olives for the same price. This economy and gas prices have been drivers for food producers to practice some shrinkage, but I don't expect re-enlargement when the economy recovers.
I keep seeing odd package masses, such as 15 oz cans of beans and 13 oz bags of chips. What's wrong with the pound? Trader Joe's sells me a pound of organic chips for less than I find 13 oz bags of other chips at the supermarket. This isn't really a problem, but something to keep watch of if you're particular with your price thresholds and ratios.
Showing posts with label Costs. Show all posts
Showing posts with label Costs. Show all posts
2011-01-28
2010-09-27
What is a Food Stamp Budget?
Every once in a while some group or other challenges its members to eat on a food stamp budget for a time to raise awareness of food security issues. How much money is in a food stamp budget, and how do we evaluate if it is the right amount?
Let's turn to the USDA's FAQ for the Supplemental Nutrition Assistance Program (SNAP). Scroll down to the bottom of the FAQ. A person whose net income is at or below the poverty line ($903/month for a single person) gets $200/month worth of benefits, which is about $6.67 per day. Each additional person in the household increases the poverty threshold by about $312/month, and results in an another $150-167/month in benefits, depending on how many people there are in total. The decrease in benefits per additional person makes sense because of economies of scale. I happily feed two of us for less than twice the cost of feeding just myself. A family of four gets about $5.56 per person per day.
My immediate reaction is not only to say that it is easy to live at the poverty level of income, but also that SNAP benefits are extremely generous. I spent years supporting myself below the poverty line, and I still spend less on food for my household of two than SNAP would allot. Besides my experiences, let's look at some statistics from the USDA. A two-parent and two-child family earning less than $56,870 (average $36,380) in 2008 spent an average of $9000/year/kid. I would love to see the standard deviation for that, and the average for families earning less than $13,000, or even $13,000 to the top of the bottom overall national quintile if none of the study participants were in poverty. A family with $56,000 inflates these averages with its discretionary spending, so we don't know what amounts of money are actually necessary. An average of 18% of the $9000 went to food, which comes to $1620/year/kid, or $135/month/kid. So, the amount of SNAP benefit for each additional kid in a family is roughly 11-23% more than many families spend on average.
A single parent spends about 2/3 as much on the kids per year, which probably gives us a much better approximation of what amount of spending is actually necessary, but we don't see in the report what percent of this smaller amount of money goes to food. If a kid costs $6000/year, or $500/month, a family in poverty will see progressively larger problems with more kids, since the poverty line only gets bumped up by $312/month/person. Except that the $6000/year figure includes a bunch of assumptions that fit the USDA model for families who are not in poverty. About $2000 of that would be housing, and people below the poverty line tend to qualify for housing assistance such as Section 8. Health care might be about another $500, and people below the poverty line tend to qualify for Medicaid, and children for SCHIP. There are pieces of information missing from the puzzle, but overall I can find few complaints with the poverty cut-offs and SNAP benefits allotments.
The complaint about SNAP benefits is of course that they are too high on average. And there is evidence that people with more SNAP funds than they need may use them to buy more unhealthy food that damages their health and unnecessarily burdens our health care system and country.
My other complaints are that the system seems too rigid, and does not obviously take into consideration differences in cost of living by geography. As seen in the USDA report, rural areas are cheaper to live in than urban areas, and the urban south is cheaper than the urban northeast. Perhaps the SNAP benefits are high because they have to be able to feed people who live in expensive areas, and people who live in cheap areas just get a big windfall of steaks and whatnot. The USDA does say that "Eligibility levels are slightly higher for Alaska and Hawaii" because food costs more in those states due to transportation. I am only looking at the federal maximum allotment levels, and different states may have different policies that better reflect their costs of living by area. In the future, I will look into the policies of my state and select other states.
Let's turn to the USDA's FAQ for the Supplemental Nutrition Assistance Program (SNAP). Scroll down to the bottom of the FAQ. A person whose net income is at or below the poverty line ($903/month for a single person) gets $200/month worth of benefits, which is about $6.67 per day. Each additional person in the household increases the poverty threshold by about $312/month, and results in an another $150-167/month in benefits, depending on how many people there are in total. The decrease in benefits per additional person makes sense because of economies of scale. I happily feed two of us for less than twice the cost of feeding just myself. A family of four gets about $5.56 per person per day.
My immediate reaction is not only to say that it is easy to live at the poverty level of income, but also that SNAP benefits are extremely generous. I spent years supporting myself below the poverty line, and I still spend less on food for my household of two than SNAP would allot. Besides my experiences, let's look at some statistics from the USDA. A two-parent and two-child family earning less than $56,870 (average $36,380) in 2008 spent an average of $9000/year/kid. I would love to see the standard deviation for that, and the average for families earning less than $13,000, or even $13,000 to the top of the bottom overall national quintile if none of the study participants were in poverty. A family with $56,000 inflates these averages with its discretionary spending, so we don't know what amounts of money are actually necessary. An average of 18% of the $9000 went to food, which comes to $1620/year/kid, or $135/month/kid. So, the amount of SNAP benefit for each additional kid in a family is roughly 11-23% more than many families spend on average.
A single parent spends about 2/3 as much on the kids per year, which probably gives us a much better approximation of what amount of spending is actually necessary, but we don't see in the report what percent of this smaller amount of money goes to food. If a kid costs $6000/year, or $500/month, a family in poverty will see progressively larger problems with more kids, since the poverty line only gets bumped up by $312/month/person. Except that the $6000/year figure includes a bunch of assumptions that fit the USDA model for families who are not in poverty. About $2000 of that would be housing, and people below the poverty line tend to qualify for housing assistance such as Section 8. Health care might be about another $500, and people below the poverty line tend to qualify for Medicaid, and children for SCHIP. There are pieces of information missing from the puzzle, but overall I can find few complaints with the poverty cut-offs and SNAP benefits allotments.
The complaint about SNAP benefits is of course that they are too high on average. And there is evidence that people with more SNAP funds than they need may use them to buy more unhealthy food that damages their health and unnecessarily burdens our health care system and country.
My other complaints are that the system seems too rigid, and does not obviously take into consideration differences in cost of living by geography. As seen in the USDA report, rural areas are cheaper to live in than urban areas, and the urban south is cheaper than the urban northeast. Perhaps the SNAP benefits are high because they have to be able to feed people who live in expensive areas, and people who live in cheap areas just get a big windfall of steaks and whatnot. The USDA does say that "Eligibility levels are slightly higher for Alaska and Hawaii" because food costs more in those states due to transportation. I am only looking at the federal maximum allotment levels, and different states may have different policies that better reflect their costs of living by area. In the future, I will look into the policies of my state and select other states.
2010-08-25
Coupons
Coupons seem like they would be a major part of grocery gaming, but they really haven't managed to become a significant factor for me. I only end up using coupons a handful of times each year. Coupons come to me in my primary grocery store's weekly flyer and in an envelope and a magazine of coupons in the mail aggregated by a third party company. Newspaper subscribers typically get coupons on Sundays, unless that's changed over the years. I've looked into websites such as coupons.com, but I just do not find enough useful coupons to justify the time it takes to find them.
On these internet sites, which typically require registration with some personal information that they will sell in exchange for giving you access to the coupons, I find many coupons of negligible value for products I don't want. Sugary cereals, heavily processed foods, total junk I don't buy. The coupons provide savings along the lines of $0.75 off if I buy 3. So, not only do shoppers only get about $0.25 off each item, they have to buy three items to get the discount. Lame.
In our modern information age, as newspapers lose readership and grocery stores use membership cards to track shopping patterns and direct incentives, I get good prices for the things I buy due to periodic store discounts without coupons. For example, Dannon Light & Fit yogurt is usually marked as $1.05 for 6oz. That is a crazy price that I will not pay. But for about a week each month the store marks down the price to $0.50 for 6oz. Then I buy 20 of them. When I see coupons for that product, it's remarkable for them to give me $1.00 off for buying two 4-packs. The 4-packs are priced differently than individual cups, and even using the coupon when the 4-packs are on sale rarely brings the price down to $0.50 per cup.
What cognitive phenomena go on when we see coupons? Anchoring is definitely taking place, in which the regular price (artificially inflated) serves as the anchor to which we compare the discounted price so that we feel like we're getting something for a lower price than it's worth even when the discounted price is higher than the product's worth if we stop to really think about it. I think also that the coupons serve as advertisements that cause us to think more about the product than regular advertisements do, and that thinking activates more parts of the brain that contribute to purchasing decisions. It has been found that we get more neurologically excited (dopamine in the anterior cingulate cortex, for example) at the expectation of how satisfying a product will be than when we actually have it. It takes a lot of mindfulness to recognize that you won't really be as happy as you expect you will if you buy a freezer-full of frozen pizzas with a dollar coupon. Off the topic of coupons, this is a contributing factor to obesity as people try to eat until they are as satisfied as they expected they would get.
So, my experiences trying to find a good source of useful coupons have led me to generally avoid such a waste of time. I tend to rely instead on the grocery store's weekly sales.
On these internet sites, which typically require registration with some personal information that they will sell in exchange for giving you access to the coupons, I find many coupons of negligible value for products I don't want. Sugary cereals, heavily processed foods, total junk I don't buy. The coupons provide savings along the lines of $0.75 off if I buy 3. So, not only do shoppers only get about $0.25 off each item, they have to buy three items to get the discount. Lame.
In our modern information age, as newspapers lose readership and grocery stores use membership cards to track shopping patterns and direct incentives, I get good prices for the things I buy due to periodic store discounts without coupons. For example, Dannon Light & Fit yogurt is usually marked as $1.05 for 6oz. That is a crazy price that I will not pay. But for about a week each month the store marks down the price to $0.50 for 6oz. Then I buy 20 of them. When I see coupons for that product, it's remarkable for them to give me $1.00 off for buying two 4-packs. The 4-packs are priced differently than individual cups, and even using the coupon when the 4-packs are on sale rarely brings the price down to $0.50 per cup.
What cognitive phenomena go on when we see coupons? Anchoring is definitely taking place, in which the regular price (artificially inflated) serves as the anchor to which we compare the discounted price so that we feel like we're getting something for a lower price than it's worth even when the discounted price is higher than the product's worth if we stop to really think about it. I think also that the coupons serve as advertisements that cause us to think more about the product than regular advertisements do, and that thinking activates more parts of the brain that contribute to purchasing decisions. It has been found that we get more neurologically excited (dopamine in the anterior cingulate cortex, for example) at the expectation of how satisfying a product will be than when we actually have it. It takes a lot of mindfulness to recognize that you won't really be as happy as you expect you will if you buy a freezer-full of frozen pizzas with a dollar coupon. Off the topic of coupons, this is a contributing factor to obesity as people try to eat until they are as satisfied as they expected they would get.
So, my experiences trying to find a good source of useful coupons have led me to generally avoid such a waste of time. I tend to rely instead on the grocery store's weekly sales.
2010-03-31
Amortization and Utilities
You may be unfamiliar with the term amortization. Its root means death, and the word refers to killing the cost of something on a balance sheet gradually over time instead of all at once at the time of purchase. Amortization is relevant to our game when calculating true costs of meals. So far, I have only included the costs of food in my write-ups, and this is typical of reports of the costs of meals.
Electricity and gas costs for cooking are not amortized. They would be recorded in full at the time of cooking. Unfortunately, you would have to know how much gas and electricity you use during cooking, and how much you pay per unit. Electricity prices change according to time of day and your peak use, depending on your supplier. I think I pay about $0.05 on average to run my microwave for 15 minutes. You may also find out about how much water, heating, and soap cost you for washing dishes, since those costs are also related to your meals.
Electricity costs for refrigeration should be distributed. Fridges use a lot of juice. If you are really motivated, you can keep track of everything you refrigerate and figure out exactly what proportion of your fridge electricity cost can be attributed to each food, but that is a lot of work. Maybe estimate the monthly cost of running your fridge and flatly divide by the number of meals you make that use refrigerated items, then add that amount to the cost of each meal. A quick search suggests that a typical fridge costs $8-12 to run per month. That adds about $0.10-0.30 to each meal.
Cookware! Quality cookware, the stuff that turns food out properly, can cost piles of money, but lasts generations if you take care of it. Non-stick cookware generally needs to be replaced every few years (or not used). Investing in durable equipment that you will use more can result in lower per-use costs. Suppose you drop $100 on a sweet stainless steel pot with an aluminum core. That's a lot of money, but it makes nicer meals than a $20 pot (there is a significant difference). If you use it once a week for 20 years, that's about $0.10 per use, which can be a fraction of that per meal. Good, maintained cookware should last a lifetime.
Appliances are also investments. A Sunbeam blender may only cost $15, but when it breaks after a few uses and has to be replaced, you'll realize you would have been better off with a $60 Oster. A $20 slow-cooker may do bad things to your food that a $100 slow-cooker with a timer and higher-quality construction would not. Whatever your decision, think about the amortized cost over the lifetime of an appliance. Maybe you can look back on your buying behavior and realize that you have a tendency to buy things that you end up not using much. In the store you think "I'll use this so often!" but things sit on your shelves while you eat frozen dinners and fast food. Know yourself, be conservative, and think about how much you're spending on a per-meal basis.
You can see that the variance is very high among amortized and utility costs for your meals depending on what equipment you buy and how you use it. Based on the numbers I threw together for this post, I estimate that these costs add an average of $0.50 each time I cook, which is about $0.10 per meal over all. Seemingly trivial, but it can add up, and wise, big one-time equipment purchases can be daunting to someone with few financial resources, confusing the value of saving up for a purchase.
Electricity and gas costs for cooking are not amortized. They would be recorded in full at the time of cooking. Unfortunately, you would have to know how much gas and electricity you use during cooking, and how much you pay per unit. Electricity prices change according to time of day and your peak use, depending on your supplier. I think I pay about $0.05 on average to run my microwave for 15 minutes. You may also find out about how much water, heating, and soap cost you for washing dishes, since those costs are also related to your meals.
Electricity costs for refrigeration should be distributed. Fridges use a lot of juice. If you are really motivated, you can keep track of everything you refrigerate and figure out exactly what proportion of your fridge electricity cost can be attributed to each food, but that is a lot of work. Maybe estimate the monthly cost of running your fridge and flatly divide by the number of meals you make that use refrigerated items, then add that amount to the cost of each meal. A quick search suggests that a typical fridge costs $8-12 to run per month. That adds about $0.10-0.30 to each meal.
Cookware! Quality cookware, the stuff that turns food out properly, can cost piles of money, but lasts generations if you take care of it. Non-stick cookware generally needs to be replaced every few years (or not used). Investing in durable equipment that you will use more can result in lower per-use costs. Suppose you drop $100 on a sweet stainless steel pot with an aluminum core. That's a lot of money, but it makes nicer meals than a $20 pot (there is a significant difference). If you use it once a week for 20 years, that's about $0.10 per use, which can be a fraction of that per meal. Good, maintained cookware should last a lifetime.
Appliances are also investments. A Sunbeam blender may only cost $15, but when it breaks after a few uses and has to be replaced, you'll realize you would have been better off with a $60 Oster. A $20 slow-cooker may do bad things to your food that a $100 slow-cooker with a timer and higher-quality construction would not. Whatever your decision, think about the amortized cost over the lifetime of an appliance. Maybe you can look back on your buying behavior and realize that you have a tendency to buy things that you end up not using much. In the store you think "I'll use this so often!" but things sit on your shelves while you eat frozen dinners and fast food. Know yourself, be conservative, and think about how much you're spending on a per-meal basis.
You can see that the variance is very high among amortized and utility costs for your meals depending on what equipment you buy and how you use it. Based on the numbers I threw together for this post, I estimate that these costs add an average of $0.50 each time I cook, which is about $0.10 per meal over all. Seemingly trivial, but it can add up, and wise, big one-time equipment purchases can be daunting to someone with few financial resources, confusing the value of saving up for a purchase.
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