Irrationally Predictable
Behavioural economist and Harvard Professor Anne Dariely has spent the last year at the Erasmus University researching a number of European case studies. I attended a lecture she gave in June at the Amos Tversky Institute in Brussels. Based on the detailed notes I took and a conversation I was fortunate enough to have with her, here are some of the most interesting cases she has been studying.
1. Accountant Noud K. is terrified of contracting football fever during the European Championships. He says it is irrational and poses a threat to his individualism. Not only does he refuse to shop in supermarkets which sell products packaged in the colour of his national football team, ‘Oranje’(Orange), he is also the only home owner in his street who has not draped his house in orange pennants or hung out the Dutch flag. Since all the supermarkets he is boycotting have, predictably, jumped on the orange bandwagon, Noud K. has run low on essential supplies and has been forced to shop at weekly markets, something which he is normally refuses to do, as he has an (irrational) aversion to mixing with all walks of life.
2. After thirty successful years in the area of the town known as de Busterd, a branch of a well-known supermarket in Turnhout, Belgium faces a quandary. An unforeseen and rapid change in the socio-economic make-up of the area has forced the store to reconsider its product range. Two hundred millionaire foodies have moved into an apartment block opposite and are demanding that the store sell ‘über-expensive ingredients’, such as Beluga caviar, Amedei Porceleana chocolate, Balsamic Vinegar of Modena, Chinese Matsutake mushrooms, and 1982 Chateau Mouton Rothschild. The company is worried it will lose its traditional clientele if it does place the pricey items on its shelves, but believes it cannot pass up the chance to make huge profits from the wealthy gourmands.
3. Property tycoon Mehmet O. is an avid supporter of both the Dutch and Turkish national soccer teams. He has sponsored teams and financed the building of modern stadiums in Turkey but has not yet invested to anything like the same degree in the Netherlands, despite the fact that he was born and raised in Amsterdam. He cites as his overriding reason that the Dutch victory celebrations are not sufficiently out-of-control or passionate. Unsurprisingly, he points to the street celebrations of Turkish football supporters in Dutch towns and cities after the defeat of the Czech national team on 15 June 2008 to make his point. Excessive honking of car horns and blocking of roads is, for him, the “ultimate indicator of devotion to nation that transcends reason and needs no beer to fortify it”. He believes that ‘orange fever’ has more to do with business than sport and lacks real joy.
4. Fashion designer Jeannette P. wants to design and make clothes for people living in remote and cold locations. She seeks people whose lives are so far removed from the myriad complex influences of consumer society that their one priority is keeping warm. This will then allow her to introduce them to her fashions, which they will either like or not, with no external frame of reference or predispositions to complicate things.
5. Market researchers Lola S. and Rolf K. are reluctant to make public the results of their recent survey of the typical Austrian. Using statistical data, surveys, opinion polls, sales figures, and home interviews with real families, they found that the average Austrian wears socks in bed, paints their walls green, drinks 610 glasses of alcohol yearly and has sex with their spouse 132 times. The average Austrian family has 1.7 children, shops at discount supermarkets and takes a holiday for 2 weeks every year. In short, the survey shows that Austrians are highly predictable. The researchers’ worry that these findings will not be welcome news to the Austrians, who pride themselves on their individualism. They want the Austrians to continue being predictable rather than attempt to buck the trend of homogeneity shown in the survey by indulging in wildly unpredictable consumer behaviour.
6. Mindful of the widely-held belief that one should not shop for food when one is hungry, a Dutch supermarket is trying out three ways of increasing sales. The first is to lobby the government to introduce a law preventing employees of large companies from taking lunch later than one o’clock. The second is to develop products which nourish but do not fill. The third involves only allowing consumers to buy food for their next meal. This would mean, for example, that someone shopping at 10 o’clock am would only be allowed to buy enough food for their next lunch, thus ensuring they would be hungry on their next visit to the supermarket.
Thursday 5 March 2009
March 2009 'First Quarterly'
Ostriches, the Human League and good times for Oostkapelle
Murphy’s Law (anything that can go wrong will go wrong) made me its victim on 10 February. I left 40 euros behind in the cash dispenser on the campus and a carton of cream burst in my bag, ruining a map of Tilburg, turning my diary into a sticky mess and dripping all over my coat. To cap it all, I sustained a flat tyre and got soaked in the rain.
When misfortune strikes, I tend to be fairly resilient. After something bad happens, I make something good happen, in the spirit of cognitive behavioural therapy. I cooked a delicious ostrich steak with herb tagliatelle and served it with caramelised chicory (witlof) and mustard sauce. I wouldn’t be beaten by Murphy!
I won’t be beaten by the credit crunch either! I will eat exotic and expensive food. I will enjoy the finer things in life! I know this sounds overdone. I have always felt this way and I am probably just rationalising my own self-indulgence and making excuses for my unhealthy obsession with food.
Despite being good for you and versatile, ostrich is not credit crunch food in the sense that eggs are (cheap and in abundant supply). In two different ways it is apt. First, as we’ve seen, eating it when money is tight is a moderate statement of defiance. Second, it’s comfort food; it makes you feel better, it consoles you, though in my case, the consolation was more local, aimed at rescuing a disastrous Wednesday evening.
I got to wondering how the credit crisis is being experienced in the Netherlands. There is the obvious stuff: unemployment is on the rise, banks and financial institutions are feeling the pinch, the construction industry is suffering, and retailers face tough times. Blah blah blah. I’m still not sure how far this has affected daily life but across the water in my home country, things seem clearer. The credit crisis is hitting harder, the obvious example being the plummeting pound. My sister in law remarked at the weekend that the British can’t afford to go abroad on holiday at the moment. It was a rather sweeping statement, typical of conversation at a party when the drinks are flowing. “Your recession is worse than ours!” she seemed to be saying to me. She may well have been right, but it wouldn’t surprise me if bookings on the Dutch coast are up this year, as people here opt for a cheaper holiday too.
So some sectors, like tourism in the home country, can profit from a credit crisis. Whilst I wish the ostrich farmers well, I doubt that purveyors of exotic foods in this country will be able to take advantage of the crisis. I think that the pleasures of the stomach will be amongst the first things to be sacrificed, if times get really tough. The Dutch still eat to live, by and large, rather than the other way round. Perhaps discount supermarkets will see their profits soar.
Although this is wishful thinking on my part, I think that the arts and culture industry will try to make the most of these belt-tightening months (or years), as people seek escapism through films, theatre, music and exhibitions. It’s a simple formula and it’s nothing new. Adversity results in creativity. Previous recessions have thrown up extraordinary, vibrant culture. The Great Depression in the United States was a time of tremendous innovation in the arts, in all areas, from art and design through literature, music, even architecture. There were the big bands, the novels of Hemingway and Steinbeck, and the buildings of Frank Lloyd Wright, to name just a few. As the recession hit hard in Britain in the early eighties, popular culture responded with vigour. Alan Bleasdale’s TV drama “The Boys from the Blackstuff” offered a scathing critique of the poverty and unemployment of Thatcherite Britain. Pop music was rich and fertile. Bands like The Human League captured the mood of the era in songs like “Hard Times” but also provided glamour and escapism. The early eighties mood was a strange mix of bitterness and joy.
My own financial crisis is a drop in the ocean. Assuming that the forty euros was seen and pocketed by someone (good luck to them, finders keepers!), it won’t reduce me to poverty. At most, I regard it as mildly irritating. After the ostrich therapy, I did two other things which I felt were appropriate: I planned some recipes involving lentils, rice and cheap vegetables and I wrote some poems.
Murphy’s Law (anything that can go wrong will go wrong) made me its victim on 10 February. I left 40 euros behind in the cash dispenser on the campus and a carton of cream burst in my bag, ruining a map of Tilburg, turning my diary into a sticky mess and dripping all over my coat. To cap it all, I sustained a flat tyre and got soaked in the rain.
When misfortune strikes, I tend to be fairly resilient. After something bad happens, I make something good happen, in the spirit of cognitive behavioural therapy. I cooked a delicious ostrich steak with herb tagliatelle and served it with caramelised chicory (witlof) and mustard sauce. I wouldn’t be beaten by Murphy!
I won’t be beaten by the credit crunch either! I will eat exotic and expensive food. I will enjoy the finer things in life! I know this sounds overdone. I have always felt this way and I am probably just rationalising my own self-indulgence and making excuses for my unhealthy obsession with food.
Despite being good for you and versatile, ostrich is not credit crunch food in the sense that eggs are (cheap and in abundant supply). In two different ways it is apt. First, as we’ve seen, eating it when money is tight is a moderate statement of defiance. Second, it’s comfort food; it makes you feel better, it consoles you, though in my case, the consolation was more local, aimed at rescuing a disastrous Wednesday evening.
I got to wondering how the credit crisis is being experienced in the Netherlands. There is the obvious stuff: unemployment is on the rise, banks and financial institutions are feeling the pinch, the construction industry is suffering, and retailers face tough times. Blah blah blah. I’m still not sure how far this has affected daily life but across the water in my home country, things seem clearer. The credit crisis is hitting harder, the obvious example being the plummeting pound. My sister in law remarked at the weekend that the British can’t afford to go abroad on holiday at the moment. It was a rather sweeping statement, typical of conversation at a party when the drinks are flowing. “Your recession is worse than ours!” she seemed to be saying to me. She may well have been right, but it wouldn’t surprise me if bookings on the Dutch coast are up this year, as people here opt for a cheaper holiday too.
So some sectors, like tourism in the home country, can profit from a credit crisis. Whilst I wish the ostrich farmers well, I doubt that purveyors of exotic foods in this country will be able to take advantage of the crisis. I think that the pleasures of the stomach will be amongst the first things to be sacrificed, if times get really tough. The Dutch still eat to live, by and large, rather than the other way round. Perhaps discount supermarkets will see their profits soar.
Although this is wishful thinking on my part, I think that the arts and culture industry will try to make the most of these belt-tightening months (or years), as people seek escapism through films, theatre, music and exhibitions. It’s a simple formula and it’s nothing new. Adversity results in creativity. Previous recessions have thrown up extraordinary, vibrant culture. The Great Depression in the United States was a time of tremendous innovation in the arts, in all areas, from art and design through literature, music, even architecture. There were the big bands, the novels of Hemingway and Steinbeck, and the buildings of Frank Lloyd Wright, to name just a few. As the recession hit hard in Britain in the early eighties, popular culture responded with vigour. Alan Bleasdale’s TV drama “The Boys from the Blackstuff” offered a scathing critique of the poverty and unemployment of Thatcherite Britain. Pop music was rich and fertile. Bands like The Human League captured the mood of the era in songs like “Hard Times” but also provided glamour and escapism. The early eighties mood was a strange mix of bitterness and joy.
My own financial crisis is a drop in the ocean. Assuming that the forty euros was seen and pocketed by someone (good luck to them, finders keepers!), it won’t reduce me to poverty. At most, I regard it as mildly irritating. After the ostrich therapy, I did two other things which I felt were appropriate: I planned some recipes involving lentils, rice and cheap vegetables and I wrote some poems.
December 2008 'First Quarterly'
Blankers-Koen and Jumpers for Goal Posts versus Big Bucks and The Cowardly Sponsor
Our decision to leave England for Holland had much to do with money. A few years earlier, consumer groups had coined the phrase ‘rip-off Britain’. We were thoroughly sick of being fleeced and it gave us some comfort to think that the injustice of paying more for products than in other rich countries had been formally identified and labelled. Things like cars, electrical goods and houses were and still are more expensive in Britain than in other EU countries.
Now I’m less pissed off. The pricing issue was not so simple as the emotive slogan portrayed it to be. Factors like the strong pound and high fixed costs played their role and away from London I feel things less personally. It has been more than seven years since we left, so the rows with mini cab firms and angry exchanges of letters with estate agents and property managers are so much water under the bridge that they’ve flowed into the sea of Bigger Picture.
Now there is a real chance the UK is going to be very hard hit by recession in the wake of the credit crisis. Perhaps London should host a second ‘Austerity Olympics’. The next games may cost 10 billion pounds. That is a good deal less than the bill for Beijing but many would argue it is still unreasonably high given the current state of the economy. The 1948 London Olympics were held during the post-World War II period of national austerity, with rationing still in effect and many areas of the city still bombed-out ruins. Only £760,000 were spent on the games, which were, against the odds, hugely successful. Competitors were taken to venues on buses and underground trains, American athletes shared food with their British counterparts and some of the latter even sewed their own kit. A spirit of fair play and shared values prevailed and Dutch housewife and mother Fanny Blankers-Koen became a legend for her time.
With each games there is so much at stake; there are the corporate interests, there is the legacy, the stimulus to the economy and of course the sporting performances and national pride. Each Olympics has to exceed the last one, be bigger, grander and more inspiring. Yet the Olympic Games are much like Christmas; both are magnificent, pompous and in thrall to commerce. What’s more, despite the profits made by some, they both lead to debt. With the exception of Los Angeles, no Olympic Games has ever made money. Christmas leaves millions of people in the red.
Ok, but at the heart of both, lies something pure, doesn’t it? For Christmas, goodwill and giving, for the Olympics, brotherhood and the spirit of competition. Isn’t that what counts? Well, the purity of Christmas has long been sullied and sport lost its innocence ages ago. Take football. At one end of the spectrum is park football (with jumpers for goalposts, naturally). At the other, there is corporate football, where millions are made from TV rights, ticket prices and replica team shirts. Currently, the average price of a season ticket in the UK premier division is just over £600. A season’s worth of Arsenal matches costs £1,355. We’re back in ‘rip-off Britain’ territory.
Money needs sport and sport needs money. Schools need money for equipment and facilities. Athletes need financial support and sponsoring. Grassroots schemes to get inner city kids involved in sport need big injections of cash. More of the profits made in professional sport should go towards these worthy recipients, rather than line the pockets of shareholders.
Football is ailing but not terminally ill; it has just been rather spoilt. However, in 1999, a group of exasperated English supporters, fed up with the commercialization of the sport, pronounced football ‘dead’ and laid a wreath to commemorate the event. A similar sporting demise was announced by newspaper France Soir at the height of the Michael Rasmussen scandal in 2007. The paper regretfully announced the death at age 104 years, and following a long illness, of the Tour de France. A succession of doping scandals had taken its toll on the Tour. Rasmussen was never found guilty of doping and his sponsors Rabobank dumped him on less convincing gounds, because he had allegedly lied about his whereabouts at the time of a training session. At the time, I lost respect for Rabobank. I thought they were cowardly and should have stuck by their man. Obviously, the bank was making an understandable, hard-headed business decision. The Danish cyclist was clearly going to damage their brand. For my part, I felt retroactively vindicated in our decision to ditch the bank for another mortgage provider earlier that year, though I guess the eternally smug Rabobank won’t miss me much.
Our decision to leave England for Holland had much to do with money. A few years earlier, consumer groups had coined the phrase ‘rip-off Britain’. We were thoroughly sick of being fleeced and it gave us some comfort to think that the injustice of paying more for products than in other rich countries had been formally identified and labelled. Things like cars, electrical goods and houses were and still are more expensive in Britain than in other EU countries.
Now I’m less pissed off. The pricing issue was not so simple as the emotive slogan portrayed it to be. Factors like the strong pound and high fixed costs played their role and away from London I feel things less personally. It has been more than seven years since we left, so the rows with mini cab firms and angry exchanges of letters with estate agents and property managers are so much water under the bridge that they’ve flowed into the sea of Bigger Picture.
Now there is a real chance the UK is going to be very hard hit by recession in the wake of the credit crisis. Perhaps London should host a second ‘Austerity Olympics’. The next games may cost 10 billion pounds. That is a good deal less than the bill for Beijing but many would argue it is still unreasonably high given the current state of the economy. The 1948 London Olympics were held during the post-World War II period of national austerity, with rationing still in effect and many areas of the city still bombed-out ruins. Only £760,000 were spent on the games, which were, against the odds, hugely successful. Competitors were taken to venues on buses and underground trains, American athletes shared food with their British counterparts and some of the latter even sewed their own kit. A spirit of fair play and shared values prevailed and Dutch housewife and mother Fanny Blankers-Koen became a legend for her time.
With each games there is so much at stake; there are the corporate interests, there is the legacy, the stimulus to the economy and of course the sporting performances and national pride. Each Olympics has to exceed the last one, be bigger, grander and more inspiring. Yet the Olympic Games are much like Christmas; both are magnificent, pompous and in thrall to commerce. What’s more, despite the profits made by some, they both lead to debt. With the exception of Los Angeles, no Olympic Games has ever made money. Christmas leaves millions of people in the red.
Ok, but at the heart of both, lies something pure, doesn’t it? For Christmas, goodwill and giving, for the Olympics, brotherhood and the spirit of competition. Isn’t that what counts? Well, the purity of Christmas has long been sullied and sport lost its innocence ages ago. Take football. At one end of the spectrum is park football (with jumpers for goalposts, naturally). At the other, there is corporate football, where millions are made from TV rights, ticket prices and replica team shirts. Currently, the average price of a season ticket in the UK premier division is just over £600. A season’s worth of Arsenal matches costs £1,355. We’re back in ‘rip-off Britain’ territory.
Money needs sport and sport needs money. Schools need money for equipment and facilities. Athletes need financial support and sponsoring. Grassroots schemes to get inner city kids involved in sport need big injections of cash. More of the profits made in professional sport should go towards these worthy recipients, rather than line the pockets of shareholders.
Football is ailing but not terminally ill; it has just been rather spoilt. However, in 1999, a group of exasperated English supporters, fed up with the commercialization of the sport, pronounced football ‘dead’ and laid a wreath to commemorate the event. A similar sporting demise was announced by newspaper France Soir at the height of the Michael Rasmussen scandal in 2007. The paper regretfully announced the death at age 104 years, and following a long illness, of the Tour de France. A succession of doping scandals had taken its toll on the Tour. Rasmussen was never found guilty of doping and his sponsors Rabobank dumped him on less convincing gounds, because he had allegedly lied about his whereabouts at the time of a training session. At the time, I lost respect for Rabobank. I thought they were cowardly and should have stuck by their man. Obviously, the bank was making an understandable, hard-headed business decision. The Danish cyclist was clearly going to damage their brand. For my part, I felt retroactively vindicated in our decision to ditch the bank for another mortgage provider earlier that year, though I guess the eternally smug Rabobank won’t miss me much.
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