An interesting new study suggests that the poor have more to think about in terms of trade-offs which costs them financially.

Recently, I received a nice postcard from a friend who was explicitly trying to prop up her favorite dying US agency — a beautiful, thought though likely futile effort. It made me wonder about the future of businesses that primarily operate offline.

The Internet through the spread of email has permanently disrupted the main business of the US Postal Service, and the uptick in shipping packages to homes from e-tailers hasn’t quite made up for the lost business. That fact surprises me as I consider my recent Black Friday experience seeing many retail spaces remaining empty, big box stores appearing desperate, and online stores doing better than ever. The future of retail feels like it will be largely online with offline delivery for anything that doesn’t have to be consumed or used immediately. Such a future feels a little bleak when you try to imagine all the empty street windows. 

That said, I don’t think that could really come to pass since some equilibrium will be reached. I have started to wonder what would keep retail spaces filled and bustling with business. I’ve come up with five ways this would be possible:

1. Experienced based retailing. I believe either offline retailers are going to have to be like Walmart or be like Apple in the future. They won’t be able to charge a 20-50% markup on a pure commodity shopping experience; instead they must produce an amazing retailing experience or they must simply have cheaper prices than the Internet has to offer. 
2. Pop-up retailing. Internet companies have already begun this season tocreate pop up stores in cheap, empty retail spaces. These pop up stores enable online stores to have a real world face.
3. Online Sales Tax. Federal enactment of such a tax would remove the uneven playing field that sites like Amazon enjoy right now. This would certainly help make offline prices more comparable to online prices.
4. Better Online-to-Offline Advertising. If there was a way to use the Internet to better market and direct customers to offline locations, then bricks and morters would have a chance. Right now, most online advertising focuses on online-to-online conversions (something I’m trying to change through PaperG).
5. Advertising retailing. It’s possible that retail spaces will get so cheap that they become effectively three dimensional advertising spaces. Brands can rent out the space and fill it with their goods supplemented with representatives to answer questions. 

Some or all of these will likely to come true. I hope so because I would hate to live in a world of empty windows.

Commuting is one of the worst things you can do for your happiness and finances. This is why I live 15 minutes walking distance from work. I’m glad someone has finally quantified the issue:

So each mile you live from work steals $795 per year from you in commuting costs.

In other words, a logical person should be willing to pay about $15,900 more for a house that is one mile closer to work, and $477,000 more for a house that is 30 miles closer to work. For a double-commuting couple, these numbers are $31,800 and $954,000.  

Since 1995, airfare prices are down 21% after inflation. Airlines really have no pricing power even after all the consolidation. I wonder if the pricing trend has anything to do with the Internet and the increased pricing transparency of the market. In fact, I wonder how anyone decided what airplane ticket to buy before the internet.

tip of the hat @ilovecharts

Drawing on the insights of psychology, behavioral economists have explained why we buy more stuff at $0.99 than at $1.00 (the “left-digit effect”), why we commit to gym memberships we’ll never use (“optimism bias”), and why we don’t return things we buy as often as we should (“post-purchase rationalization”). The giants of the web, from Amazon to Zynga, use similar tricks to keep us coming to their sites, playing their games, and buying their goods. In fact, that’s how they became giants in the first place. Here’s how they game us