Your fathers logic isn't wrong.
But next time your dad goes shopping, ask him why he doesn't take your dinner groceries from the dumpster. They both feature comparable amount of nutrients and calorie intake in them?
Next time you buy furniture or paint. Why not buy the ultra-lead based paint for 80% less than what everyone else buys? It features the same coverage per sq ft?
And the car he bought...why didn't he buy the $600USD car that India was selling and getting popular a while back? It holds gas and goes places?
Yeah, a 500W PSU isn't needed in the mind of a software person. He is right. But in terms of hardware, many people buy larger PSU's because it is actually cheaper to buy a 700W mediocre PSU than a very well done 450W PSU. You need to account for load, degredation of performance over time, part quality, Amps on the rails, multi-rail or single, and everything else.
In a software person's mind. You calculate the estimated full load power draw of a computer rig and boom. That is what you buy. In a real hardware buyers mind. They know that PSU's in general and en mass, aren't built like that, hence why they are so cheap comparatively to the rest of the rig. A 450W Dynex made PSU that cost $10 is NOT going to be able to power a system that, on load, uses 420W most likely. Most cheap PSU's can't actually handle 100% load. This is a pretty frequent test that PC reviewers for PSU's do. Give it 100% load and above and see if it trips, fries or whatever.
The cheap PSU's almost always fry and pop rather than safely just trip and reset.
Guess what is the next step protecting a kilo-buck worth of computer equipment? Your computer grounding kinda (a bit), the type of floor it may be on (depending on if you rubbed and moved your comptuer over carpet continuously before hand, this may of course exxacerbate the damage), your motherboards built in (or not) surge protection feature, and the general tolerance of computer parts to static electricity and spikes. And hey, let's throw in how humid your house is and how old your components are.
P.S: I'm just including everything I can think of for protection. Obviously the type of floor it is on can be debated, but it is just one of many factors regarding it.
TL;DR: There is a reason that you don't eat food from the garbage can. Chemically, it is the same thing. But you will kill yourself from saving a few bucks.
Ask your dad if he wants to drink from the local river from now on. His body 'should' have the tolerance to handle the load of infectants, pollutants, and other baddies in there right? And if that fails, there are the probable countermeasures that his body has right?
This is akin to putting a $20 PSU in a kilo-buck rig.