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January 08, 2008

Costs now and costs later

In making the purchase of something that will last a long time, economists recommend that buyers consider not only the purchase price but also the annual operating costs. For one very popular durable purchase, the annual operating costs may be significant, but few people are aware of this. Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, the product we are talking about is flat screen TVs. And recent analysis shows that the annual operating costs in terms of electricity you need to run them can be four to five times higher than for a conventional TV. And some energy experts worry that as the public changes en mass to these new TVs, there is going to be a significant uptake, up tick, I should say, in total energy use in the household and, of course, in the nation. However, I should point out that these higher energy costs for flat screen TVs could be offset by lower energy costs elsewhere. For example, if people with flat screen TVs don't go to movies as much due to the TV's quality, then they are going to save money and energy on travel, and theaters are not going to operate as much. So - bottom line here, of course - is we are not telling people not to buy flat screen TVs but to try to make their decisions with full information. Try to get data not only on the cost of the TV - the installation cost, etc. - but also on the energy expenditures. And make your decision based on that full knowledge."

Posted by Dave at January 8, 2008 08:00 AM