Although I communicate with money, it’s a passive communication. Competition among sellers of most day-to-day items produces enough consumer surplus to render money as barely being a consideration. I guess you could say (as you actually have) that I am under-communicating.
But I’m very careful with how I allocate my discretionary time. For example, I have about 90 discretionary minutes today. You might say that I am spending about 20 of my 90 “time tokens” on writing these words.
The problem is that although I think my time tokens are scarce and valuable, they’re unfortunately worthless to you. Too bad they’re not transferable, where my spending 20 time tokens would give you 20 extra minutes of free time today.
Pretend you are on an ATM line and an affluent-looking person rushes up to you and says, “I desperately need to catch a train that‘s leaving in a few minutes. May I please go ahead of you?”
And your answer is, “Sure, for one dollar.”
It’s actually a true story, as I did this once. The person gave me a nervous smile and said, “No, really, I’m in rush. Please let me in front of you?”
“It’s not worth a dollar to you?”
I got a cold glare and the person went to the end of the line. I don’t know if she missed her valuable train ride.
(As an aside, there’s also the issue of whether I even had the authority to allow her to cut in front of me without securing permission from everyone else in the line. But that’s not relevant to my point here.)
Your neighbor is making too much noise, so you bring over a box of cookies as a gift. After some pleasantries and complimenting how their kids are so astonishingly brilliant and well-mannered, you say, “By the way, we would be so happy if you could just lower the volume of your music.”
Now turn the clock back and try it again, replacing the box of cookies with five one-hundred dollar bills. Then try the pleasantries and complimenting their kids and see how things turn out.
Were the cookies worth more than $500? If the goal is to get them to lower the music, then I think the answer is “yes”, even though that seems to make no sense.
None of this is intended to diminish the importance of people using prices to communicate how much they value things. Instead, I think the opposite is true: These examples illustrate how all parties can be made worse off because they refuse to accept market pricing to reach better outcomes.
I’ll confess that, in the ATM example, I had to overcome an urge to say, “Sure, you can go ahead of me if it means that much to you.” But the flip side is that if I was in a hurry, I would much prefer the “cold” exchange of handing over some cash instead of publicly pleading with strangers in an attempt to appeal to their senses of guilt and pity to do something for me.