Buying Secondhand Saves Money, but Can Cost You Dearly

It used to be that there were three basic ways to find used items to buy―yard sales, thrift stores, and the classified section of newspapers. But nowadays, with the Internet bringing the world into your living room, people have access to a multitude of online yard sales and auctions. It’s hard to resist the lure of getting something used for pennies on the dollar compared to buying it new. In some cases, you can find a great bargain and get just what you were looking for while saving a little money. But there are some things you should always buy in person or brand new, instead of buying them unseen.

Yes, you can get what sounds like a screaming used system on eBay and other online sites, and you can save a lot of money by buying factory refurbished models from dealers and online computer stores. But many new computers nowadays are so affordable that there’s no real reason to buy a used system. With a used system you can’t get it customized to provide exactly what you need, and the technology will always be at least a little outdated. Because of the speed at which technology changes nowadays, it never pays to buy an old or used computer, especially if you plan to use it for work or anything important. Many mass-market manufacturers, including Dell and Compaq, offer entire computer systems for less than $500. They may not be the best built computers in the world, but at least everything is brand new and you’ll have a manufacturer’s warranty to back them up.

One of the most risky large items to buy online can be appliances. Washing machines, dryers, refrigerators, gas ranges―you can find just about any used appliance out there for sale. But old appliances have no warranty or guarantee, and you can’t tell how well they will work just from a seller’s description and a photograph. Newer models of appliances will be more energy efficient and have more up-to-date technology, which will save money on utility bills. Shipping for large items such as appliances can also be expensive. If you really want to buy a used appliance to save money, the best way to do it is to see it in person, and preferably see it working, before laying out the cash for something that might not work when you get it home.

Strollers, Car Seats, and Cribs
According to the Consumer Product Safety Commission, every year at least 16 children die because of unsafe cribs. Some of those deaths are from cribs that are designed poorly, but many of them are from cribs that simply break down unexpectedly. The risk of your child being injured or killed isn’t worth the few bucks you might save by buying something online sight unseen. Strollers, car seats, cribs, and any other child-related merchandise should always be bought new.

High-tech Electronics
With the growing plethora of fancy electronic items taking over our lives every day, and the expensive tags they carry, it can be tempting to search online auctions for affordable digital cameras, DVD players, and even plasma screens. But because high-tech electronics usually have delicate mechanisms, even the slightest flaw can affect your enjoyment of the product, and that flaw might not be readily apparent. Older models of plasma screens, for example, may have images burned into the screen that you might not see right away. Electronics are also being continually updated, and the speed with which newer models are released is growing faster each year. You can buy brand new digital cameras cheaply that won’t have the highest pixel count and won’t have many of the fancy features new cameras offer, but you will have a manufacturer’s warranty, and sometimes you can even try them out in the store before buying.

Mattresses and Upholstered Furniture
Mattresses are particularly tricky to buy used, because you never know who has been sleeping on them, what has been spilled on them, or what type of home they were used in. Unless you know the person you’re buying it from, or you have access to a reputable company that can clean and disinfect it, you should never buy a mattress used. Upholstered furniture also carries the same risks. These items may come from homes with heavy smokers, cats or dogs, babies in diapers, people with chronic illnesses, flea or bedbug infestations, or any number of situations that could contaminate the furniture to a point where it makes your life miserable. Spend the money and buy them new.

Although there are hundreds of things you can buy used that will save you money and give you just as much satisfaction as you’d get from a new item, there are also hundreds of used things that could easily make your life miserable. With a little savvy and common sense, you can save yourself a lot of heartache―as well as money―by spending a little more and buying something new in the first place.

Importance of Social Cost Benefit Analysis

Social cost benefit analysis is a part of calculating the merits of a project or a government policy. As the name suggests, social cost-benefit analysis of anything is associated with its social impact. This means that how a project or a policy will affect people is analyzed. Only after calculating the opportunity cost of a project, it is approved.

The scope of social cost benefits can be applied to public investment and also to private investment. In case of public investment, it plays a major role in the economic development of a developing country. And, in case of private investments social cost benefit analysis is important as investments are to be sanctioned and are monitored by the government. There are two aspects of calculating the cost benefit analysis of any project. One is the private cost-benefit analysis and the other is social cost-benefit analysis. Though, social cost-benefit analysis is usually undertaken by the government.

Social cost is often in contrast with private cost. Major differences between social cost benefit analysis and private cost benefit analysis are as follows:

1. In social cost benefit analysis, not only profit but also other effects like how will it affect life of others are considered. Whereas, in private cost benefit analysis, the focus of the analysis is on maximizing profits.

2. For calculating social cost benefit, market prices for the factors to be considered cannot exist. Therefore, market price is not the main factor taken into consideration while calculating social cost benefit. Whereas, for private cost benefit analysis market price forms the base of the analysis and the key factor that determines if a project is viable.

Social Cost = Negative Impact
Social Benefit = Positive Impact

Social cost benefit analysis has been introduced to develop systematic ways of analyzing cost and benefits of factors which do not have market prices, like effect on environment and traffic. Social cost-benefit calculates non-monetized benefits/ losses. It is normally used for large fund projects like constructing a dam, a road. Such projects have higher social cost-benefits and also affects the price level to an extent.

Example: If a bridge is to be constructed then how much will it benefit the people who live in that particular area, is to be analyzed. Therefore, how many people are willing to use the bridge, how much traffic will be reduced and what is the increase in cost of traveling, will have to be assessed as a whole to come to a conclusion. Suppose, if people are not willing to use the bridge if the cost of traveling from the bridge is $5 and if $7 has to be charged per vehicle to make this project feasible, then the government may consider dropping the project out.

On the other hand, if people are willing to travel using the bridge, being indifferent to the toll price-difference of $2, and the traffic is reduced by a good amount, then the government will sanction the project. Therefore, it is beneficial to take up a project if its total benefits (B) are more than its total costs (C).

It can be put up as, a project should be undertaken if, B/C > 1 or even when B=C. That is, when the cost-benefit ratio exceeds unity or when benefit derived and the cost of the project is equal. Before sanctioning a project, cost and benefit of alternative projects are assessed too. For example, the opportunity cost of setting up a hospital instead of a school.

Importance of Social Cost Benefit Analysis

The importance has been explained with the help of the following factors that affect the general masses as a whole.

Market Failure
Market failure when a big project is not affecting everyone but only a few. A private firm would only look at profitability and related market prices to take up a deal but the government has to look at other factors. To determine the social cost in case of market failure and when market prices are unable to define them. These social costs are known as shadow prices.

Savings & Investment
Impact of the project on general savings and investment level. A project that induces more savings are investment in an economy and not the other way round.

Distribution & Redistribution of Income
The project should not lead to accumulating income in the hands of a few but, it should equally distribute the income.

Employment and Standard of Living
How a project affects employment and standard of living will be taken into account as well. The deal should lead to increase in employment and standard of living.

Externalities are impacts of a project which can be both harmful and beneficial. Therefore, both the effects are to be assessed before sanctioning a deal. Positive-externalities could be in the form improvement in technology and negative-externalities could be in the form of increase in pollution and destruction of ecology.

Taxes and Subsidies
In a general cost benefit calculation, taxes and subsidies are considered as expenses and income respectively. Though in case of social-cost benefit analysis, taxes and subsidies are considered as transfer payments.

Social cost benefit analysis enables the government to take up new developments which will benefit everyone and not just a few. Also, it helps in bringing about an overall development in an economy and can help make decisions that will increase employment, investments, saving and consumption, thus, improving the economic activities in an economy.