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It starts out innocently.

There's a party. You need an outfit. It's summer sale season in a recession. No-brainer! Two birds with one card: You will bolster both the economy and your own bottom line by finding yourself the bargain of the century.

Off to the department store you go, armed with only your wallet and a vague idea of something splashy, flashy, spangly, stripy or demure. Whatever it is, it's going to change your life – and for half-price or less.

But when you get there the shop is uncomfortably crowded, nothing looks quite right. Undaunted, you try on some party clothes, but the waistbands dig, the hemlines droop, the colours fade under the fluorescent lights.

So you broaden your search. And before you know it – hallelujah! – you're gliding out the revolving door with a bag full of 70-per-cent-off fake gold bangles, half-price flip-flops, multipack tube socks, budget-brand body glitter and a set of picture frames marked down to $50 from $150. It's practically criminal the amount of money you've saved. And you spent only $200! You skip home, heart pounding with the rush of the deal, smug in the knowledge you've beaten the system.

Two weeks later, you stumble across the bag, rifle through the random contents and think: Why? Why? Why?

As anyone who has ever fallen prey to the impulse purchase knows, the thrill of buying low can often be as cheap as the merchandise itself.

But what would you say if I told you that the urge to purchase at discount – one of the most pervasive market forces of our time – is also bad for the economy, the culture and the future of the species as a whole?

This is the counterintuitive thesis of Cheap: The High Cost of Discount Culture , a fascinating new book by U.S. writer and analyst Ellen Ruppel Shell, who examines the ramifications of what she calls “our relentless fixation on low price.”

Ruppel Shell argues that we have paid a steep price as individual shoppers by falling for the allure of low-cost merchandise at the expense of quality and craftsmanship. While most dedicated shoppers lust after a bona-fide bargain (i.e., good-quality goods on discount), the impulse to find it often clouds our judgment.

“We've been trained to look for value for money, which is a bedrock concern,” she said in a phone interview this week. “But low price distracts us from that. So the deal itself becomes the goal.”

Examined in a broader, historical context, our hunger for cheap merchandise has been a destructive force. Sure, we can buy our Costco family pack and eat it too, but at what cost? The culture of cheap has driven down wages (by outsourcing manufacturing and ushering in an era of big-box mega-chains), driven up personal debt (by tricking us into spending more on scads of cheap stuff and less on carefully chosen quality) and created the globalized economy in which underpaid developing-world labour churns out disposable merchandise for the bargain-hungry West.

The upshot? A discount-obsessed culture that gives little thought to the long-term economic, social or environmental ramifications involved.

As Ruppel Shell puts it, “cheap stuff is about the disposability of goods but also of people.”

The numbers are as astonishing: From 2000 to 2007, median family income in the United States (adjusted for inflation) dropped by $1,175 (U.S.), while basic expenses grew by $4,655. In the same period, corporate profits doubled. (Comparable Canadian statistics during this time indicate a similar though slightly less drastic trend.) Were rising prices to blame? On the contrary. According to Ruppel Shell, the average American in 2007 paid lower prices for clothes, food, appliances and cars than they would have in the 1970s.

Yet many of us persist in the belief that we pay more for goods and services than previous generations did, and that retailers who charge higher prices are simply trying to rip us off.

This mistrust of mid-range pricing has created a market in which higher-priced “luxury brands” are astronomically marked up, while almost everything else becomes bargain-basement merch – a category in which distinctiveness and quality is sacrificed for the lowest possible price.

Ruppel Shell cites Gresham's Law, the famous adage that “bad money drives out good,” to explain the huge success of low-priced chains like Topshop and IKEA. Bad products drive out good: Producers of better stuff just can't compete.

“Talking to retailers, it's very difficult to exist in the middle ground. That category is very scarce if not gone altogether,” she says. “The problem is people aren't motivated by quality or distinctiveness. They're motivated by price.”

But the dark irony is this: Low pricing doesn't make us spend less. It makes us spend more. As budget-brand retailers from Frank W. Woolworth to Ingvar Kamprad, the multibillionaire founder of IKEA, have long known, low prices equal high profits.

And naturally, the less money we have in the bank, the more we are compelled to seek out the lowest possible price – thus perpetuating an economic force that drives wages down, sends personal debt through the roof and starts the bargain-hunting cycle all over again.

How's that for a consumer Catch-22?

In this sense, Ruppel Shell sees the compulsion to buy cheap as similar to our obsession with fast food (her last book, The Hungry Gene , was about the obesity epidemic).

“We're driven into a buying frenzy in part because we can't get quality. It's like junk food. You actually eat more because it doesn't satisfy you.”

So has writing the book made her immune to a bargain? “No one is,” she says, recounting the story of her most recent purchase – a new shirt, bought for her book launch. “I left a store having bought one thing at full price. That never would have happened before.”