Goldilocks and the Three Prices

Ramit Sethi · May 18th, 2011

I was out to dinner with 5 people recently. Two of us live in San Francisco, two live in the Palo Alto area, and two live mid-Peninsula (in between).

Think of it like this:


Quiz: What is your earning potential? Choose the answer you agree with the most
View Results

Many of you don’t know, but I almost became a cartographer. However, I chose blogging due to the copious amounts of female groupies.

Anyway, after eating, when the bill came, something interesting happened.

The two of us from SF went, “Wow, that was cheap.”

The two from mid-Peninsula just shrugged.

And the two from Palo Alto/Mountain View said, “Jeez, that was more than we thought.”

It was a picture-perfect commentary on the food prices for each of the areas in which we live.


Context matters.

Whenever people say “I can’t believe he spent THAT MUCH on (dinner, clothes, going out…), I just laugh. Geographic location is just one of the invisible variables that affect how much other people spend.

This is why my parents can’t believe how much dinner costs in San Francisco, while I now think it’s cheap compared to my dinners in New York.

This is why people cluelessly say, “That’s RIDICULOUS!” without understanding the context of spending, income, living expenses, and priorities.

And it’s why when you’re judging other people’s spending, you should really shut the hell up.

Do you know your actual earning potential?

Get started with the Earning Potential quiz. Get a custom report based on your unique strengths, and discover how to start making extra money — in as little as an hour.

Start The Quiz

Takes 3 min


  1. her every cent counts

    That’s hilarious. As a “Peninsula-er” I know exactly what you mean. Though food in Palo Alto isn’t exactly cheap compared to SF… unless I’m eating at the wrong restaurants.

  2. Darryl

    I somewhat agree. We should all mind our own business, worry about ourselves and not judge others. However, when you have a friend that constantly complains about credit problems and money problems, then goes out and brags about spending all this money on clothes and dinners and is trying to convince you to take a vacation` with him this summer…you can’t help but judge.

  3. Thursday Bram

    Man, do I know that feeling. My family thinks I’m crazy for how much I spent on my house. Problem is, I live just outside of DC. My down payment almost buys an entire house in Oklahoma and the other Midwest states where my family lives. But for anyone out here, I negotiated a darn good deal.

  4. Perspective -

    […] short but interesting post today on understanding the perspective & priorities of others: Goldilocks and the Three Prices Some slight language at the end […]

  5. Daniel M. Wood

    I believe price always is in relation to what is offered and how much you make.
    If you make 10 dollars per hour – 40 dollars is a lot.
    If you make 45 dollars per hour – 200 dollars is a lot.

    If the food offered is only worth 20 dollars – 40 dollars is a lot.

    Any offer has to be good in relation to what you are willing to spend.

  6. victoria

    That’s what my East Bay friends say when they find out how much I pay for my 1bd 600+sq/ft rent-controlled apartment in SF (still way below market value).

    Btw, it took me awhile to get used to SF food prices, having grown up in SJ. $2 for a Viet sandwich in SJ versus $4.50 here in SF.

  7. Jennifer

    This is so dead on. I’m planning a wedding right now, and one of the first things I read was that the average cost of a wedding nationwide was something like $28,000. But that’s an *average* — a standard wedding in Nebraska is going to be a heck of a lot cheaper than Philadelphia, where I live. I had to get that number out of my head and determine what *our* budget was, what we were willing to spend and what we found to be worth the money, rather than comparing ourselves to a national average and freaking out over a number that someone else determined.

  8. Alex | Perfecting Dad

    Same thing with our house. We are selling, but we added a floor to our house so now we’re the biggest house within a few streets. It’s like people lose their minds, they don’t know what the value is. People will buy the same sized house for $60K more maybe 10 blocks away, in the neighborhood that has those sizes of house. Or they will buy the smaller house for 100K less very near us. What I don’t get is why people, who need a house of this size, don’t get buy ours to save the $60K.

    Same house, too big and expensive for one group, but another group would rather pay more. It’s the adage coming true: You’d rather be the worst house on the street, not the best house on the street.

  9. Collin

    This really comes into play when traveling for extended periods of time in third-world countries. I found myself so used to paying the equivalent of $1-2 for a good meal that suddenly a $3.50 meal seemed outrageous. I bartered to save 70 cents on transport, only looking at the percentage (hey that’s 30% off!).

    Overall I tend to agree with the hourly-rate model. If you make $20/hour, a $60 meal costs 3 hours (for you).

  10. Justin

    Geoarbitrage 🙂 This is how I figure going to foreign countries for extended periods of time isn’t all that expensive…relative to the cost of living in cities like NY and SF.

  11. Context. Context. Context. Prices, Adjectives, Worldviews, everything depends on context. The biggest misunderstandings usually result from people coming from different backgrounds (aka contexts).

  12. Justin @ MoneyIsTheRoot

    Prices are relative to each set of incomes, or geographical location. I always find that staying at a hotel on the beach in California is more expensive than a hotel in a suburb in metro Detroit lol.

  13. Parris

    Hi Ramit,

    I enjoy your work a lot. Especially, when you draw from real life examples in simple yet “russian nesting doll” fashion. I normally, have to save your articles on instapaper and set aside at least 30 minutes to “digest” them. This story more like an appetizer but it reminded me of the potential clients who compares my NYC prices to costs in other their hometown or the country. So how did you respond to your friends who thought the meal was TOO much?

  14. Delia

    well said 🙂

  15. Justin

    I moved from Atlanta, probably the most affordable “big city”, to Southern California.

    All I can say is- I was spoiled in GA and didn’t even realize it! Gas, housing, food, everything was much cheaper.

    I pretty much say “it depends” or “it’s all relative” at least once a day. How else can you explain that for some people $1,000 in the bank for emergencies is all you’ll ever need, and for others $1,000 in the bank wouldn’t last you a week!

  16. I think everyone should live in a city and in the “country” at some point of their life. It’s really sort of shocking.

    I grew up in a small town, moved to the big city, then moved back to small town. Everything in small town seems so incredibly cheap all the time and then I hear family/friends complain about the prices… which of course is a lot to them… but when you’re used to paying so much more, all you can really do is smirk.

  17. I just love your closing sentence. Sums up my feelings exactly.

  18. Elvin

    I’m surprised you were almost a cartographer! I have a B.A. in Geography with my concetration is GIS and Cartography! Too bad I don’t use my degree…

  19. bob DC25

    Everything is relative, hence why it is best not to make snap judgements about anything.
    Love your sense of humor Ramit!