June 2008 'First Quarterly'

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.