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A Financial/Economic Phenomenon While Spending On Miscellaneous Items; Something Applicable In Nigerian Consumer

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josediccus
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25 days ago4 min read

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Image source; Legit.ng Features of Nigerian currency notes and coins ▷ Legit.ng


In Nigeria there's a financial acceptance that when you remove ₦50 (naira) Nigerian currency from a ₦1000 note (which of course is the highest denomination of the Nigerian currency) through expenditure to purchase goods and services it's like there's this inferiority to the remaining ₦950 and there's is an eagerness or willingness to exercise one's spending power when holding ₦950 as to when they're holding a ₦1000 note, this is often weird because normally there is a marginal satisfaction when there's means to purchase rather than when there is less. In economics there's what we call absurdity to every economical situation for example in the supply and demand curve, in the equilibrium curve and well others. For example when there is increase in price and there's increase in quantity supplied and also increase in demand that's a perfect example of inelasticity and well absurdity and this has a similar situation to what I'm really talking about.

While spending sometimes people hardly prepare for miscellaneous buys and this makes them spend more money than they initially estimated, however when there is whole figure, and there are more miscellaneous things to buy then the whole figure to a currency wouldn't be jeopardize but if there aren't whole figures or the money remaining is coming in ranges like₦858, ₦952, ₦784 rather than ₦1000 ₦1500 then there's an increased eagerness to spend on miscellaneous buys however this is only when miscellaneous goods are on the table or in contention after the initial pre-planned items have been bought and accounted for and this is why there's an extra willingness to buy or purchase extra or miscellaneous goods in a Nigerian geographical setting comes from having lesser and lesser and I'll state a Case study.


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Image source;The Economic Times Household Consumer Expenditure: Consumer spending declines

If Mrs Hannah has ₦1285 left after buying all the goods and services she wants and she's got to buy fish, meat, vegetables and coffee as miscellaneous goods after her main shopping, her limit to spending on miscellaneous items will be halted when she's gotten to the whole figure, for example she's will be willing to spend the ₦285 and let be of the ₦1000 due to the fact that she considers this other buys as not being a compulsion but a necessity for a futuristic time to derive marginal utility from buying a miscellaneous product added to the estimated reason for shopping in the first place. So she places value on a whole denomination rather than when it's been deducted to at least buy something. For example removing ₦1 from ₦1000 makes you have ₦999 left so this ₦999 in a person who is buying looks likes ₦850, ₦920 or ₦783 and why is this? This is because the ₦1 that was removed from the ₦1000 now makes it seems like the remaining ₦999 has less value.

This of course is a consumer's mindset towards buying and not recognised as an economic phenomenon, it's an absurdity that comes with need and wants and sometimes it depends on the income of a consumer to be able to be applicable to an extent I can't say for foreign financial situations, but this is a phenomenon that's rampant to a Nigerian consumer. The willingness to buy miscellaneous items isn't boosted when you have whole figure in the sum of ₦1000, for example it's very difficult to buy a candy which costs ₦5 out of a ₦1000 whole currency and the reason is because a candy is a not really a pressing demand or need for an average incomed consumer but it's easier to buy a candy of ₦5 from a ₦885 amount which isn't really whole until rounded up through spending to ₦500 then it becomes difficult to spend again out of a #500 whole denomination. Of course it deals with the mindset and it's something of a financial situation which I've observed from more than a dozen people. Feel free to share anything financial/economic absurdity in your society. Thanks for reading.




Thank you for reading

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