I know next to nothing about economics. Let me make that clear up front. So I get fascinated by what I’m sure are very basic concepts. In his recent article Camels and Rubber Duckies, Joel Spolsky talks about “consumer surplus,” which he describes as “the extra value that those rich consumers got from their purchase that they would have been perfectly happy to do without.” He says that “capitalists want to capture the consumer surplus” by trying to make customers who can afford it pay more for the exact same product than those who can’t.
I got a first-hand account of this today. Yesterday, our car was involved in an accident, and is in the service shop getting fixed up. My insurance company pays for a rental car, so this morning I went to Hertz to get one. The agent there informed me that my insurance would pay for a compact car, but they were running a promotion where if I paid extra, I could get my choice of car. I said I was happy with the compact car. After consulting the computer, he told me that for only $5 more per day, I could rent a Nissan Altima, which was a nice big full-size car. I told him I wasn’t interested, and he went out to get the car my insurance would cover. When he came back in and handed me the keys, he told me he was upgrading me to the Altima free of charge.
It’s obvious to me that the Altima was the cheapest car he had on the lot, and he was going to have to rent it to me even at the compact-car rate. I’m not sure whether to be annoyed at the sleazy sales tactics, or to admire the gusto with which he tried to get me to pay more for the exact same car I was going to get anyway.