Alejandra Yañez | THE RIDER
UTRGV economics and finance professors are encouraging students to shop smart and not fall for the gimmicks of Cyber Monday sales.
“I think this is going to be the new Black Friday,” said Siamak Javadi, an associate economics and finance professor.
Javadi said many brick-and-mortar stores are already going out of business and don’t even know it yet due to the large influx of online shopping.
“To think that this is just something related to the pandemic, I would say that is not the case,” he said.
Javadi advises shoppers to look at reviews and at the distribution of the reviews before purchasing items online.
“I go with the one that has more steady reviews,” he said.
Another important online shopping tip for students to keep in mind is to not buy from random sites no matter how tempting the prices may be, Javadi said
Elena Quercioli, an associate professor of economics and finance, said there are many reasons why Cyber Monday happens, the first being the “theory of sales.”
“Firms make more money if they charge different people different prices for the same item,” Quercioli said, explaining that firms “price discriminate” in order to maximize profits.
She said firms do this to entice people who would never buy an item at full price to buy from them, and that is why, periodically, firms have big sales.
While this is the primary reason that firms host such large sales, Quercioli also explained why Cyber Monday is held the Monday after Thanksgiving.
“The answer to that has to do with the fact that in the United States, Thanksgiving marks the beginning of Christmas shopping,” she said. “So, once Thanksgiving happens, any day after that is the shopping season for Christmas.”
Quercioli said the history behind this dates back to 1939, prior to President Franklin D. Roosevelt’s declaration making Thanksgiving the last Thursday of November.
“The problem is some Novembers have five Thursdays and some Novembers have four Thursdays,” she said. “So, for the Novembers with the five Thursdays, Thanksgiving would be, like, Nov. 30, which would leave a very small window of time for people to shop for Christmas.
“So, Franklin Delano Roosevelt, in 1939, changed the rule and said, ‘No matter whether it’s a five Thursday or a four Thursday month, we’re always going to have Thanksgiving on the second to last Thursday.’”
Quercioli said that many Americans were unhappy with this change, but the merchants were in favor of the new rule because now they had more time to sell Christmas goods to people since they had a longer shopping period.
“Eventually, in 1941, Franklin D. Roosevelt decided to make it official and now the fourth Thursday of November is Thanksgiving no matter how many Thursdays the month has,” she said. “The only reason for that is to prolong the shopping season for Christmas.”
Asked what the difference is between Black Friday and Cyber Monday, Quercioli replied that Black Friday is primarily for brick-and-mortar shops while Cyber Monday is all about the online experience, so consumers can shop wherever they want.
“This is a very big deal and, of course, the United States is consumers’ paradise, so whatever the consumer wants, the consumer gets,” she said. “This is like massive, billion-dollar businesses.”
Asked what her advice is for students who plan to shop during Cyber Monday, Quercioli replied, “In general, I would say, don’t. Don’t shop because these are things that if you’re buying them because they’re cheap, then that means you don’t need them. And so you’re not really doing yourself any favors by buying things just because they’re cheap. Buy the things you need; don’t buy the things that are inexpensive.”
She said the key to shopping is to “buy the things for which your consumer surplus is maximized.”
Consumer surplus in economics is defined as what you’re willing to pay for an item and the actual price of the item.
“So, suppose the price of the item is $10; you’re willing to pay $20 for it,” Quercioli said. “There is a $10 difference, and that’s basically a gain that you make as a consumer because, really, you were willing to spend twice as much in order to get that good. That good must mean a lot to you, but you only paid $10. So essentially, in economics, we say that you gained, you made 10 extra dollars.”
Her biggest piece of advice for students looking to shop during Cyber Monday sales is to buy the things that will give you the highest consumer surplus to get your money’s worth for the items that interest you.
“My point is, when you shop, you should try to maximize your consumer surplus,” Quercioli said. “You should try to go for the things that give you the highest consumer surplus, not the things that are cheap.”
For students who are looking to save money, Quercioli advises to stay away from Cyber Monday and other price discriminating sales that are used to entice consumers.
