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The Value of Haggling

I read a post about whether or not to haggle over on Brave New Traveler. The article implores you to look at the bigger picture view. They come to the conclusion that you shouldn’t bargain too hard with the locals because you’re really rich and they’re not. I’ll give you a couple more reasons not to haggle too hard and then tell you why I usually haggle my ass off.

The article talks mainly about costs relative to the locals’ income, but how about relative to your income? If you go home empty handed, you’ll feel like you lost out. Think of how much your trip cost you, versus how much you’re arguing over. It’s not worth it. And think of how much you make per hour back home. Odds are it’s several times the amount you’re haggling over. Besides, what would you pay to not regret walking away from a cool item once you get back? I’d wager you’d pay more than you’re arguing about, but less than the price to go back there and buy it this time.

But then consider the local economy as the real big picture view. If you don’t haggle down to a reasonable local price, you drive up the price due to resource scarcity. Yes, that may be a small effect akin to the impact of one person’s vote in an election, but the aggregate effect can hurt. You can also contribute to inflation, thus reducing the buying power of non-merchants who don’t have a ready stream of inflated income. Then there is the effect of high prices on the local job market. If the tourist merchants make a lot of money, the others will not be far behind them in setting up shop, creating a flood of merchants and reducing the size of the work force to do other essential tasks.

I met Jeppe Jungersen on a plane after he was involved in shooting Makibefo – an adaptation of the Shakespeare play – in Madagascar. He said the crew had to very carefully manage the economic risks before, during and after shooting. The balance they had to strike was to get enough people to act in their movie without stopping people from fishing or creating income inequalities among the villagers. The crew hired a local from another area to act as a language, cultural and economic translator. They about paid the same for all actors and extras as the locals would make from a day’s work fishing. Incidentally, that also meant that the actors weren’t just in it for the money, but were there because they really wanted to be.