Explain xkcd: It's 'cause you're dumb.
Title text: And if you drive a typical car more than a mile out of your way for each penny you save on the per-gallon price, it doesn't matter how worthless your time is to you--the gas to get you there and back costs more than you save.
This comic is a jab at price-gouging shoppers who spend large amounts of time checking multiple shopping outlets for the best deals. The minimum wage is the lowest possible wage that a person could legally be paid, usually only targeted at providing unskilled laborers with an equitable level of income. In 2011, when this comic was published, US Federal minimum wage was $7.25 an hour, though certain states and cities typically have higher minimum wages. Using simple math, the caption states that a person is effectively working below the minimum wage when they spend their time looking to save a few cents on their purchases. (Randall's math checks out: $7.25/hour times nine minutes would equate to just over $1.08)
Benjamin Franklin's adage "A penny saved is a penny earned" is usually taken to mean that a person, merely by making the effort to save their money rather than spending it frivolously, has put in worthwhile effort that makes them deserving of that money. Cueball flips the meaning of the phrase, instead saying that saving money is work just like a job, and as one would not take a job that paid less than minimum wage, the compensation is inadequate for the amount of effort it would take to drive to a cheaper gas station.
Of course, if you are unemployed and cannot expect to get any wages it could still be worth your time.
The title text, however, then goes on to talk about how the extra fuel consumption involved in finding cheaper gas leads to more extra money being spent on gas than is actually saved at the cheaper outlet.
This problem has also been examined in What if? - Cost of Pennies. See also 1205: Is It Worth the Time?.
However, Randall neglects to consider the effect that customers have on prices. If customers consistently go out of their way to get the lowest prices, then sellers will be motivated to lower their prices to attract customers. On the other hand, if customers consistently purchase from the most convenient seller, then sellers can raise prices without losing business.
- [Ponytail is standing next to Cueball filling his vehicle with petrol. Ponytail is pointing off-screen.]
- Ponytail: Why are you going here? Gas is ten cents a gallon cheaper at the station five minutes that way.
- Cueball: Because a penny saved is a penny earned.
- If you spend nine minutes of your time to save a dollar, you're working for less than minimum wage.
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Unless you're unemployed, in which case spending extra time to find deals is *probably* a good idea since you're not going to be earning any more money with that time anyways. Davidy²²[talk] 08:47, 9 March 2013 (UTC)
- Unless you read the title text. At which point, you are burning enough gas to not only negate the savings, but actually make the cheaper gas more expensive. Sure, if you have 2 gas stations across the street from each other, go to the cheaper one, but even unemployed people should just get the most convenient gas. --18.104.22.168 17:59, 30 April 2013 (UTC)
- Not true. Our objectives in life is not to maximize our income. We also value leisure. In equilibrium, the marginal value of a minute of leisure is worth the marginal value of a minute of working. Now you could argue that due to frictions, the workweek is stuck at 40 hours, so a person who values working more than leisure doesn't have the option to work more overtime at will, so we're not actually at equilibrium. So if you are this kind of person, then go ahead. However a lot of people who work 40 hours a week actually value their leisure more, i.e. they wish they could scale back their hours at a proportional wage rate to enjoy more leisure. Indeed, it is likely that in aggregate, marginal value of leisure is very close to marginal value of labor; it just varies on an individual basis. Mac520 (talk) 14:31, 12 February 2014 (UTC)
- I bet they're not taking benefits into account -- if your employer was paying you 97.5% of your current salary for 39 hours per week instead of 40, you'd have to expect 2.5% less contribution to your health and dental care, your 401k, and whatever else. Some of which would probably be illegal to contribute less to (especially if you're unionized), so the difference would be taken out of your paycheck instead. Promethean (talk) 02:12, 17 November 2015 (UTC)
The trick is that unless there is someone willing to pay you for your time at the moment, your time really cost nothing. Which means that for people working 40 hours a week, there are 128 unpaid hours per week. Okay, it can be argued that instead you could be doing something more pleasurable or useful (i.e. doing it yourself instead of paying someone else for the service). But in reality there still is plenty of time simply wasted, so 10 minutes one way or the other just doesn't matter. And by the way, at the typical U.S. marginal tax rate, a penny saved equals almost two pennies earned. 22.214.171.124 21:34, 21 January 2014 (UTC)
- You don't have 128 hours available to spend on doing things for yourself instead of paying others, or on saving money. You need to eat and sleep and exercise. Paying someone else to do these things won't really do anything for you (except in the sense that the improvement in the other person's health could have some indirect benefit to you). And if we are going to consider societal benefits, then you have to consider the value of the tax you pay as much as the value of the health care spending reduction from paying someone else to exercise, eat, or sleep. 126.96.36.199 17:44, 3 February 2018 (UTC)