{"id":868,"date":"2017-06-13T22:15:24","date_gmt":"2017-06-14T02:15:24","guid":{"rendered":"http:\/\/sites.nd.edu\/mba-irish-echoes\/?p=868"},"modified":"2017-06-13T22:21:03","modified_gmt":"2017-06-14T02:21:03","slug":"how-much-for-a-sandwich-an-over-complicated-analysis","status":"publish","type":"post","link":"https:\/\/sites.nd.edu\/mba-irish-echoes\/how-much-for-a-sandwich-an-over-complicated-analysis\/","title":{"rendered":"How much for a sandwich? An over-complicated analysis"},"content":{"rendered":"

By: Jack Pelzer<\/em><\/p>\n

\"\"
An Excel screenshot courtesy of the author<\/figcaption><\/figure>\n

I was recently forwarded a USA Today article from my mother (which is generally how I get news of the outside world). The piece was entitled \u201cHow much for a sandwich? Try $90,000 in lost savings\u201d. Here’s the link:<\/p>\n

https:\/\/www.usatoday.com\/story\/money\/markets\/2017\/06\/08\/small-savings-add-up\/102558824\/<\/a><\/p>\n

This story grabbed my attention for a number of reasons. First, as an MBA candidate, I feel it is my duty to verify the present value of future cash flows. Second, I am a connoisseur of fine sandwiches.<\/p>\n

<\/p>\n

\"\"
Check out this one I got in Philadelphia!<\/figcaption><\/figure>\n

I needed to know whether my sandwich habit was delaying my dream retirement, which strangely enough is to eat more sandwiches. So, I fired up the old Excel and delved into the mathematical conjectures of a USA Today infographic. What follows is an overly complicated summary of my findings.<\/p>\n

According to the article, the average American worker eats lunch out twice a week at an average cost of $11.14. Over 30 years, those paninis add up to $88,500 in forgone savings.<\/p>\n

Right off the bat, there are problematic assumptions. Most notably, if you are writing about how small savings are a big deal, you probably shouldn\u2019t round up your headline by $1,500 to make it look nice (I mean, c\u2019mon, that\u2019s a lot of sandwiches).<\/p>\n

Also, USA Today\u2019s sandwich math fails to account for the opportunity cost of making your own sandwiches. Let\u2019s assume that you need $2 of home supplies to make a decent sandwich. Using the same numbers from the article, this adds up to:<\/p>\n

$4 * 46.8 weeks = $187.20 per year for homemade sandwich supplies.<\/strong><\/p>\n

Furthermore, if we assume it takes you 5 minutes to make a sandwich, and you earn the average American wage of $24.57 per hour, then you would incur an additional opportunity cost of:<\/p>\n

10 minutes * 46.7 weeks = 467 minutes<\/strong><\/p>\n

$24.57 \/ 60 = $.4095 per minute<\/strong><\/p>\n

467 * $.4095 = $191.24<\/strong><\/p>\n

After all, you could be getting to work earlier instead of making sandwiches.<\/p>\n

Now we\u2019re cooking. So instead of the $1,043 per year in sandwich contributions assumed initially, we are down to:<\/p>\n

$1,043 – $187.20 – $191.24 = $664.56<\/strong><\/p>\n

Time to open your Excel workbook. Or better yet, take my word that investing $664.56 per year at the 6% growth rate assumed by the article will equal $56,355.80 after 30 years.<\/p>\n

\"\"<\/p>\n

But wait, that $56,355.80 is money from the year 2047. We care about money now, not money after thirty years of eating amateur sandwiches. So, let\u2019s bring it back to the present:<\/p>\n

$56,355.80\/(1.06)^30 = $9,812.12<\/strong><\/p>\n

And there you have it. Apparently, the article is really asking, \u201cFor $9,812.12 today, would you make your own sandwiches for 30 years?\u201d<\/p>\n

Admittedly, this headline is less catchy and the cost is still a good chunk of change. However, I would gladly pay almost any price for a lifetime of professionally-made hoagies.<\/p>\n

\"\"
Although I did make this one, and it was pretty darn good<\/figcaption><\/figure>\n

 <\/p>\n

About Jack<\/strong><\/em><\/p>\n

\"\"Jack is the editor-in-chief of the MBA Irish Echoes.<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By: Jack Pelzer I was recently forwarded a USA Today article from my mother (which is generally how I get news of the outside world). The piece was entitled \u201cHow much for a sandwich? Try $90,000 in lost savings\u201d. Here’s the link: https:\/\/www.usatoday.com\/story\/money\/markets\/2017\/06\/08\/small-savings-add-up\/102558824\/ This story grabbed my attention for a number of reasons. First, as … Continue reading “How much for a sandwich? An over-complicated analysis”<\/span><\/a><\/p>\n","protected":false},"author":2556,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[213238,170015,28926,12685],"tags":[213235],"class_list":["post-868","post","type-post","status-publish","format-standard","hentry","category-business-life","category-editorials","category-finance","category-food","tag-jack-pelzer"],"_links":{"self":[{"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/posts\/868","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/users\/2556"}],"replies":[{"embeddable":true,"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/comments?post=868"}],"version-history":[{"count":6,"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/posts\/868\/revisions"}],"predecessor-version":[{"id":881,"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/posts\/868\/revisions\/881"}],"wp:attachment":[{"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/media?parent=868"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/categories?post=868"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sites.nd.edu\/mba-irish-echoes\/wp-json\/wp\/v2\/tags?post=868"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}