Psychic economy

A psychic cost is a subset of social costs that specifically represent the costs of added stress or losses to quality of life. In managerial economics and marketing, psychic costs "measure the stress of having to think about a transaction". In the 2000s, one of the important psychic costs are the "search costs" of hunting for content that interests us on the Internet.

In managerial economics, economists examine the issue of psychic costs and benefits. An example of a psychic cost is the guilt that a US-restaurant-goer feels if they do not make a voluntary tip to a waiter. There is no requirement for the client to give the tip, but if they do not, they may feel bad when they leave; to avoid this psychic cost, people are inclined to tip, even if the service was sub-standard. On the other hand, a psychic benefit occurs when one of the rewards of an action or choice are non-monetary.

Some jobs pay poorly, such as beach resorts, guitar stores, model train stores, and small colleges, but they always have applicants, because the jobs provide a substantial psychic benefit to the applicants. Seaside resorts such as Club Med pay poorly, but young adults find the prospect of living in a tropical sea resort to be very attractive. Special interest stores such as guitar stores and model railroad stores usually have small margins, and they cannot afford good wages; however, for a guitar enthusiast or a model railroad hobbyist, working in these types of stores is very rewarding, because they are surrounded by other enthusiasts, and they are respected for their knowledge of these areas. Teaching in a small college does not pay well, but new PhD graduates still want to work at these institutions, because it is so pleasant to live in a small town and work in a park-like campus filled with young people and because there is so much competition for tenure-track positions at more prestigious schools.

Stores often introduce strategies to reduce customers' perceived psychic costs, because these can cause customers to delay or forgo purchases that they are considering. Customers have many areas of perceived psychic costs in regards to making purchases. They may be worried that there will be a sale after they buy the item, in which case they will pay a higher price. For mechanical items such as cars and appliances, customers may be worried about getting a mechanically-faulty "lemon" or a product that does not suit their needs.

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