LIFEFLATION VS INFLATION

The picture was sent by one of my students who couldn’t attend his exam. I have heard the most creative excuses from students who were too late for their exam. “My dog ate my contact lenses” from 2014 is so far the most memorable. But the one I heard last month was unique! A student was scheduled for an oral exam. About 30 minutes before the exam, he emails me: “Sir, I can’t make it. I am in the train and my jeans have split in two parts. I have to head back home. I can’t show up like this…..” Once at home, he sends me the picture I’m showing here. Turns out that this was the second time this happened with his jeans. My student wasn’t lying because I was there the first time it happened. It happened in class as he bent to pick up his ear pods that fell on the ground. The jeans split into two parts on the backside.

Inflation is the increase of the aggregate price level and is generally tracked by the so-called CPI. In the most simple terms, products and services become more expensive. But apart form this, we also see something else slowly surface in Europe, something that we here at SSAA like to call Lifeflation. Products and services are increasingly engineered to have shorter and shorter life cycles so that the consumer gets less use per Euro spent. I guess my student was one of the many victims of Lifeflation. As producers feel the pressure on their profits, more and more will engineer their products to have shorter life cycles so that the consumer comes back for repurchase. In the old days, this would have been a terrible tactic. After all, the consumer would switch to another producer and you lose the lifetime value from that customer. But what if almost all producers do this? What if many producers are owned by the same private equity firm? Then there simply is no escape for people like my student.

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