Using ‘Comparative advantage spending’ to optimize your travel budget

Do you sometimes have a hard time figuring out where to cut costs when traveling in order to meet your travel budget ? Same here. That’s why I came up with a simple, but very practical framework for making these difficult decisions: I call it ‘Comparative advantage spending’.

Comparative advantage in economics is the ability of a country or a firm to produce a good or a service better than others. By better, they normally mean at a lower cost. But my version of comparative advantage, as applied to traveling, differs slightly. Instead of emphasizing on how cheaply a country can produce a good or a service, I focus on how well a country can produce it.

Before laying out the details of my framework, a quick question: What comes to your mind when you think of Paris, France ? OK, what comes to mind besides the snooty people with weird English accent ?!  I don’t know about you, by my answer goes something like this: Food, and culture. I think that Paris has some of the best food in the world as well as an amazing cultural scene. Therefore, if I were to go to Paris, wouldn’t it be logical that I prioritize my spending on these two things ?! That’s what ‘Comparative advantage spending’ (CAS from now on!) is all about.

When you have set your travel destination (of course by sing my travel optimization advice!), ask yourself ‘why am I going there?’. Depending on your budget, answer with one, two, or three of the following categories (feel free to add more if I have left some out):

  • Culture (museums, attractions, etc.);
  • Food;
  • Beach;
  • Sports;
  • Nature / Adventure;
  • Nightlife;
  • Shopping;
  • Other specific category.

Then, your general rule is to not try and save money on the items you have selected. You’d rather focus on saving on the remaining categories. That way, you are spending your money where you will most probably get the best value! Here are certain concrete examples:

  • Rio de Janeiro, Brazil. I think of the beach, adventure, and soccer. On my trip there, I therefore decided to ‘splurge’ and get a beachfront hotel, paid a little extra to hike up Pedra da Gavea, and would have made sure to make it to a soccer game at Maracanã stadium had I had the opportunity. To keep my travel budget on track, I ate mostly street food, did not do much shopping, and kept my alcohol consumption to the strict minimum (that would be three beers a day on vacation :P).
  • Las Vegas, Nevada: I think of nightlife and casinos (casinos would count as a specific category). So my expenses would focus on going to see the best DJs at the best venues, and staying at a very nice casino-hotel. For those who like to gamble, you would most certainly earmark some funds for poker, roulette, craps, blackjack, slots, or whatever game you appreciate the most. Your savings would emanate from a reduced budget for food, culture, and shopping (of course, your list could differ from mine, because Vegas has a bit of everything!).
  • Iceland: Adventure, adventure, and adventure! So rent that 4×4, hike up that glacier, swim in that geothermal bath! Just be a little more careful on nightlife/alcohol (über expensive in Iceland), accommodation costs, and cultural attractions.

Of course, this guideline is not all black or white; you are not forbidden from spending on a category that you did not select on your list! It’s up to you to judge and calibrate your spending according to how great of an overall experience you think a certain item or activity will generate. Because remember, that’s what traveling is all about: living a distinct, unforgettable experience !

I hope this easy trick can help some of you better focus your spending when traveling. If you have any other tricks or comments, do not hesitate to post in the comments section!

Adventurously yours,


PS: If this post was of interest to you, here are a few others that could spark your interest:

Long layovers: A guide to determining what your time is worth

Optimizing your travels for best value


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