When Aaina Pahwa, a 25-year-old digital marketing executive, flew down from Dubai to Mumbai to buy a Seema Gujral lehenga for Rs.2 lakh, her family felt she was behaving like a star. Pahwa maintains she did it to save money. “First, I bought it in Mumbai, instead of Dubai, where a similar thing would have been much more expensive. Second, it was on 60% discount, which translates to more savings. Besides, I will wear it multiple times, bringing down my per wear cost. I basically made money,” she insists.
What Pahwa has done is ‘girl math’, and she’s not the only one doing it. The accountant in you may baulk, but people are apparently buying things for ‘free’. Or, at least, that’s what social media will have you believe. Want to spend an outrageous amount on a designer dress, but can’t justify the cost? Enter, girl math. Just calculate the per wear cost until it’s down to a level that’s easy on the ear.
This popular social media trend, which has millions of women around the world explaining their discretionary and, sometimes impulsive, purchases is essentially ‘mental accounting’. This is a cognitive bias in behavioural economics, where people tend to assign different values to money based on its usage or origin, resulting in irrational decision-making. For instance, if one recovers lost money or gets a bonus, one assumes it to be a bounty they have fortuitously come across, not the money that belongs to them. They then consider it their right to spend it freely.
This is precisely what girl math is all about, a way to justify extravagant purchases. A refund is being considered free cash because the woman has already spent it. If she wants something and it’s on sale, she is losing money if she doesn’t buy it. Similarly, you would be losing money if you don’t spend enough to qualify for free shipping. You’re making money every time you skip your daily tea or coffee. The money in your digital wallet is free because it has already left the bank account.
VIPASHI BARUA, 22 years, Fashion student
“It was something I didn’t even need, but bought it because it was on sale and the shipping charge was Rs.120.”
This is a perfect example of the decoy effect. Free shipping is a successful marketing tool retailers use to get consumers to buy more. It’s better to pay Rs.120 for shipping than rack up an additional Rs.799 for something that’s probably of no use to you.
Rs.799 more to avoid shipping cost of Rs.120.
This kind of creative accounting and number crunching is trickling down to real life rapidly. “When I shop and get a 20% discount, I feel like I’ve made 20%,” says 28-year-old Shyamolie Parikh, a lawyer from Kochi. For Delhi-based fashion student Vipashi Barua, 22, if she doesn’t shop at her favourite store when it’s running a sale, she’s “basically losing money”.
“Buying a Rs. 600 product for half the price during sale doesn’t mean you saved 50%. It means you lost 100% of Rs. 300 because you probably didn’t need it in the first place,” says Rohit Shah, Founder and CEO, Getting You Rich, who believes it is anchoring bias at play. In fact, girl math is giving in to various other psychological biases, not just mental accounting. This is precisely what big brands have been exploiting for long: charm pricing or products with prices ending in number 9, and stores offering tiered discounts are some such examples.
Besides, every big purchase should be measured against opportunity cost. For Pahwa, the Rs.79,312 spent on lehenga has probably cost her around Rs.30 lakh in retirement money, assuming she invests it in an equity fund for 35 years and gets 12% return. That doesn’t bother Pahwa, who is an aggressive saver and considers it a one-off purchase.
Prableen Bajpai, Founder, FinFix Research and Analytics, finds the trend demeaning. “It perpetuates the stereotype of women being bad at managing finances,” she says. Everybody justifies their spending in a certain way, be it women or men, says Bajpai. “The previous generation loaded up on jewellery and the logic was that you pass it on to the next generation. That was asset building, but what we’re seeing now is pure consumption-driven spending,” she adds.
There’s another difference between the current and previous generations. More women are entering the workforce and many are choosing to not have children. This frees up a lot of cash to spend on themselves. Sonali Walia, a 31-year-old advertising executive from Delhi, is from a DINK (dual income, no kids) set-up, and likes to spend on luxury items. “What’s the point of earning well if I don’t splurge on myself once in a while,” she asks. However, when she bought a pair of Prada sunglasses recently, she found herself justifying the Rs.31,000 price tag to herself and her family. “That’s when I do girl math,” she chuckles.
StableInvestor Founder Dev Ashish says Indian women generally show more responsible behaviour than men when it comes to finances. “Girl math is a fun social media joke that has a shelf life. It should also serve as a reminder that overspending once in a while is fine, but if it becomes a habit, it can derail one’s personal finances,” he says.
Agrees Shah. “We should give in to our desires occasionally, but also find ways to save costs elsewhere or make extra money,” he says. “If you want to splurge during the festival season, do it, but spend less in the coming months so that, come March, your finances are on track,” he adds.