I was hired by an educational/research foundation a few years ago and part of the deal was that they would pay for my full moving expenses from Kentucky to Massachusetts. Do you know how much the bill was? $11,000! Ouch. But, at the margin, my cost to consuming additional moving services was zero. So, we had the movers bring us dozens of shipping blankets. We threw nothing away. We had a huge 53′ truck. You name it. At the time we only had one young child.
When I moved from Massachusetts to my current position here at the U of R, part of the deal was that the school would contribute up to $2,000 toward our move. Any additional expenses beyond that would be paid out of pocket. In other words, the marginal cost of spending an additional dollar on moving to us was a full dollar. How much did we spend, in total, on our move? About $3,000. And we have two full children, and probably had more stuff to move than we did a few years ago.
Young economics students can learn a good deal from how we “saved” so much money doing this. The major thing we did was take advantage of further specialization and the division of labor, but of course we responded to positive price signals. Dealing with the latter, when we had to pay lots of money to move stuff, we were very careful to take only that which we really found worth taking. We paid for a dumpster to throw out tons of old junk before we moved, and we gave a huge bunch of clothes and toys away, and we left plenty of furniture in the house for the new owners – including a washer-dryer as well as a set of couches. In terms of the former, it is the coolest thing in the world to watch how PODS work. This company figured out to divide the moving process up by separating the actual packing from the moving – and they did this by working up a contraption that separates the storage containers from the flatbed trucks. In other words, you do not need to employ the services of a truck to pack your stuff. This might seem simple, but such a split enabled our family to pack the things that are light and easy to pack by ourselves, which we had to move anyway when we were packing them (rather than storing everything on our living room floor, you simply take it to the container). We were able to hire specialized day movers to handle the bulky and heavy items – and in less than three hours our containers were packed. The PODS people picked up the containers for us when convenient for both of us, and dropped them off at our new house where we repeated the process in reverse.
By specializing – having us to the stuff that is easy to do (i.e. has a low marginal cost), we were able to use the “experts” in the tasks to which they were especially skilled, and had a huge advantage over me and my wife. And by having the packers not be the same people as the drivers/transporters, we further allowed those folks that had specialized advantages to do more of the things they were relatively good at and less of the things they were not. It does not make sense to have a guy who can lift and maneuver a piano spend 12 hours driving a truck and planning out trips. nor does it make sense to have someone with excellent logistical skills and a penchant for driving large trucksto be spending his time carrying bags of blankets from my house into a container.
Taking advantage of the division of labor “saved” about $8,000 for us and the people paying the bills. Why were we encouraged to do such a thing? Because the money was coming out of our pocket. How often do you make any decisions in terms of your health and medical care with such a keen sense of what things cost? And don’t go talking to me about new technologies being expensive. Absent gross regulation, every new technology in history has become MUCH more affordable over time and with greater use. There is little reason to believe the same would not be true in medical care.
I can’t necessarily get into the economics of it, but I would definitely concur that the technology, in this case “moving technology” (if you can call it that) has improved immensely. We never used PODS, but we’ve used a similar service locally and will be using Door to Door http://www.doortodoor.com in the near future. By having them drop off the pods right in front of our house and packing what we could ourselves, I can’t get over the amount of time and stress it saved. What I think a lot of people ignore with these companies, or don’t take into consideration, is the amount of time you spend driving around in a rental truck, to and from a storage unit, etc. Our time is worth a lot!
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