IKEA and Opportunity Cost

I think this is pretty much a textbook example of people with no concept of opportunity cost – you know, the cost of your next best alternative?

Canton, Michigan, will soon be home to the newest IKEA store in the United States, in my neck of the woods. It is scheduled to Open on Wednesday, June 7, and already people are waiting in line for the opening. One woman on the radio this morning was extolling her own “research” which indicated she would receive thousands of dollars in compensatory gifts for being the first person in line. Mose people, however, were aware that there was a publicized announcement that the first however-many-people would receive a free chair, valued at $89. (I’m guessing at which chair – some reports said $79, some said $99)

Some campers were claiming that they would be recipients of thousands of dollars worth of IKEA merchandize. A quick perusal of the IKEA website however, doesn’t mention anything about a free chair, or any specific gift based on where you land in line – although they will be giving out random gift-envelopes, which might have gift certificates, or coupons, etc.

The morning-show radio hosts, of course, were having a ball with this, first by trying to get people in the neighborhood to do “drive-by-shamings” of the people in line – and then later by actually speaking with those in line. One man said that “it would be a good story to tell” his children one day. The radio show vehemenly denied that this was a good story at all. And offered him $100 to leave the line and go home (and preferably, search for a job.) He went for it, so they asked to speak with the next person in line. They made the same offer: Go home, look for a job, don’t waste 2+ days of your life to get an $89 chair, and we’ll give you $100 right now.

With which, you can buy said chair, from the IKEA website. She declinded, apparently caught up in the IKEA mystique, whatever it is.

The first man received is at least $100 (explicitly) wealthier in the end than his female counterpart. At the end of two days time, the man will have: $11 more in his bank account than he had previously, the enjoyment of two-days of leisure time, and a chair. The woman, on the other hand will have $89 less than she previously had, the joy of knowing she spent 2 days of her life sitting in a tent, and a chair. I dunno, it sounds like a no-brainer to me.

We can deduce that the value of waiting in line is worth more to her than 2 days of free time (or – she has no concept of “opportunity cost”), in which she could be working, spending time with her family, vacationing, painting the house, etc. I’m putting aside the possibility that the experience is marginally more valuable than the free-time, because I’m working off the assumption that she has no concept whatsoever of “opportunity cost. Had she, she likely would accept the offer. Both contestants can buy a chair. Only one of them can spend his 2 days doing something other than waiting in line to buy the chair. I’m having a hard time justifying this by any measure of rationality. I can only conclude that the lady has no concept of “opportunity cost.”

Either that, or her time is worthless.