Great book(s) review from the New Yorker about why consumers make stupid decisions. There’s a lot of “duh” statements in here — Consumers are effort-averse? Really? — but stated in a researched, academic way.
A few Halloweens ago, Ariely laid in a supply of Hershey’s Kisses and
two kinds of Snickers—regular two-ounce bars and one-ounce miniatures.
When the first children came to his door, he handed each of them three
Kisses, then offered to make a deal. If they wanted to, the kids could
trade one Kiss for a mini-Snickers or two Kisses for a full-sized bar.
Almost all of them took the deal and, proving their skills as sugar
maximizers, opted for the two-Kiss trade. At some point, Ariely shifted
the terms: kids could now trade one of their three Kisses for the
larger bar or get a mini-Snickers without giving up anything. In terms
of sheer chocolatiness, the trade for the larger bar was still by far
the better deal. But, faced with the prospect of getting a
mini-Snickers for nothing, the trick-or-treaters could no longer reckon
properly. Most of them refused the trade, even though it cost them
candy. Ariely speculates that behind the kids’ miscalculation was
anxiety. As he puts it, “There’s no visible possibility of loss when we
choose a FREE! item (it’s free).”
Tellingly, when Ariely performed a similar experiment on adults, they
made the same mistake. “If I were to distill one main lesson from the
research described in this book, it is that we are all pawns in a game
whose forces we largely fail to comprehend,” he writes.
What is to be done with information like this? We can try to become more aware of the patterns governing our blunders, as “Predictably Irrational” urges. Or we can try to prod people toward more rational choices, as “Nudge” suggests. But if we really are wired to make certain kinds of mistakes, as Thaler and Sunstein and Ariely all argue, we will, it seems safe to predict, keep finding new ways to make them. (Ariely confesses that he recently bought a thirty-thousand-dollar car after reading an ad offering FREE oil changes for the next three years.)
This research dovetails nicely with a messaging/copywriting theory shared in a staff presentation last week: that marketing/advertising copy work best when the rationalization and left-brain justification follow the emotion-inducing photo and headline.
“Lord that's a good looking car. And snappy, and quiet. Oh, baby! Ooh, and free oil changes for three years? My wife will be THRILLED I bought the Lexus!”
p.s. Let's not read too much into the fact that my wife sent this to me.