When presented with an opportunity to save money, most people will willingly sign up without thoroughly thinking through all of the ramifications. Big box stores, membership stores and even gas stations offer consumers money saving incentives in exchange for purchase of a set amount of goods or services. Upon initial viewing, the customer may take the offer, but in the process he may have to spend more money in order to achieve select status needed for the promised goods or services. This profound theory of thinking at the margin is what drives economics. Each person determines the economic value of what he desires, so the decision to make any purchase, with or without incentives, is always a rational decision because it is consumer driven.

Many examples prove the economic point of opportunity cost, marginal thinking and incentive response. A customer walks into the local Big Y Supermarket to purchase groceries. As he is checking out, he sees an advertisement for a store rewards card. As he peruses the advertisement, he discovers that he can receive gasoline discounts, but those discounts are contingent upon the customer’s purchase of at least $50 of groceries in one visit, and the discounts continue to accrue after this initial purchase of $50. The customer signs up for the card even though his total purchase was only going to total $47. He decides to purchase $3 worth of goods that he does not really need in order to meet this initial requirement of a $50 purchase. This seems totally rational and logical to the consumer who views this as a means of saving money and reaping the rewards of the gasoline discounts at a future date. The customer can rationalize the expenditure of this extra $3 by acknowledging that, in the long run, he will be able to recoup this $3 through the gasoline discounts. This consumer is willing to give up something to afford that additional $3 purchase (opportunity cost) in order to be eligible for the incentive. He also embodies the theory that rational people think at the margin and will respond to an incentive to purchase.

Another example of incentive response involves the use of cell phones. When a person signs up to receive text messages from his favorite store, he is opening himself up to receiving a barrage of tempting offers to purchase. People’s Department Store offers its loyalty customers various opportunities to save by sending out various text messages: 25% off of a $30 purchase, $10 off your purchase of $25 or more, etc. The consumer may not have any intention of shopping at this store, but when this incentive marches across his message screen, he thinks twice about it and rationalizes that he can purchase $25 worth of goods for only $15 which makes that marginal spending doable. This consumer follows the basic economic theory that people will respond to incentives.

Market researchers and economists are finding that loyalty cards and other incentives are boosting the economy by providing consumers with a means of purchasing goods or services and being able to rationalize the expense by touting their savings. Providing consumers with a rational logical means of purchasing an item they do not really need by providing savings on it which will make it easier for the consumer to engage in opportunity cost to rationalize marginal spending. Goods and services are only valuable to those who value them, so if presented the opportunity to acquire said goods and services at a discount, the majority of consumers are able to rationalize their actions.