Alchemy

Highlights

• The technocratic mind models the economy as though it were a machine: if the machine is left idle for a greater amount of time, then it must be less valuable. But the economy is not a machine – it is a highly complex system.
• Modern consumerism is the best-funded social science experiment in the world, the Galapagos Islands of human weirdness.
• to reach intelligent answers, you often need to ask really dumb questions.
• If you want to look like a scientist, it pays to cultivate an air of certainty, but the problem with attachment to certainty is that it causes people completely to misrepresent the nature of the problem being examined, as if it were a simple physics problem rather than a psychological one.
• Not everything that makes sense works, and not everything that works makes sense.
• It’s important to remember that big data all comes from the same place – the past. A new campaigning style, a single rogue variable or a ‘black swan’ event can throw the most perfectly calibrated model into chaos.
• Irrational people are much more powerful than rational people, because their threats are so much more convincing.
• Perhaps a plausible ‘why’ should not be a pre-requisite in deciding a ‘what’, and the things we try should not be confined to those things whose future success we can most easily explain in retrospect.
• Adam Smith was as much a behavioural economist as an economist – The Wealth of Nations (1776) doesn’t contain a single equation. But, strange though it may seem, the study of economics has long been detached from how people behave in the real world, preferring to concern itself with a parallel universe in which people behave as economists think they should.
• Logical ideas often fail because logic demands universally applicable laws but humans, unlike atoms, are not consistent enough in their behaviour for such laws to hold very broadly.
• There is a simple reason for this: you can never be fired for being logical. If your reasoning is sound and unimaginative, even if you fail, it is unlikely you will attract much blame. It is much easier to be fired for being illogical than it is for being unimaginative.
• If it helps us to perceive the world in a distorted fashion, then evolution will limit our objectivity. The standard, naïve view, as Trivers observes, is to assume that evolution has given us senses which deliver an accurate view of the world. However, evolution cares nothing for accuracy and objectivity: it cares about fitness.
• In a sensible world, the only thing that would matter would be solving a problem by whatever means work best, but problem-solving is a strangely status-conscious job: there are high-status approaches and low-status approaches.
• It seems likely that the biggest progress in the next 50 years may come not from improvements in technology but in psychology and design thinking. Put simply, it’s easy to achieve massive improvements in perception at a fraction of the cost of equivalent improvements in reality.
• Perhaps advertising agencies are largely valuable simply because they create a culture in which it is acceptable to ask daft questions and make foolish suggestions.
• Instincts are heritable, whereas reasons have to be taught; what is important is how you behave, not knowing why you do.
• If you confine yourself to using rational arguments to encourage rational behaviour, you will be using only a tiny proportion of the tools in your armoury.
• What people do with their own money (their ‘revealed preferences’) is generally a better guide to what they really want than their own reported wants and needs.*
• There is a narrow and tightly limited area within which economic theory allows people to act. Once they reach the edges of that area, they freeze, rather like the dog.
• A great deal of the effectiveness of advertising derives from its power to direct attention to favourable aspects of an experience, in order to change the experience for the better.
• It is agreed by both game theorists and evolutionary biologists that the prospects for cooperation are far greater when there is a high expectation of repetition than in single-shot transactions.
• We notice and attach significance and meaning to those things that deviate from narrow, economic common sense, precisely because they deviate from it. The result of this is that the pursuit of narrow economic rationalism will produce a world rich in goods, but deficient in meaning.
• Since at the moment you make a purchase decision, the advertiser knows more about his product than you do, a costly demonstration of faith by the seller may well be the most reliable indicator of whether something is at least worthy of consideration (remember the Knowledge with London taxi drivers). It also proves that the seller is in sufficient financial health to advertise in the first place.
• choose? Not being equipped with a gene sequencer,
• In the early stages of any significant innovation, there may be an awkward stage where the new product is no better than what it is seeking to replace. For instance, early cars were in most respect worse than horses. Early aircraft were insanely dangerous. Early washing machines were unreliable. The appeal of these products was based on their status as much as their utility.
• Many innovations would not have got off the ground without the human instinct for status-signalling,* so might it be the same in nature? In other words, as Geoffrey Miller says, might sexual selection provide the ‘early stage funding’ for nature’s best experiments?
• In many ways, expensive advertising and brands arise as a solution to a problem identified by George Akerlof in his 1970 paper ‘The Market for Lemons’ in the Quarterly Journal of Economics. The problem is known as ‘information asymmetry’, whereby the seller knows more about what he is selling than the buyer knows about what he is buying.
• It is impossible to buy expensive aspirin in the UK, yet it is a waste of this wonder drug to sell it for 79p in drab packaging, when you could make it much better by packaging it lavishly, colouring the pills red* and charging more. Sometimes I have a £3.29 headache rather than a 79p one.
• feelings can be inherited, whereas reasons have to be taught, which means that evolution can select for emotions much more reliably than for reasons.
• Essentially we like to imagine we have more free will than we really do, which means we favour direct interventions that preserve our inner delusion of personal autonomy, over oblique interventions that seem less logical.
• Humphrey argues that people subconsciously respond to a sham treatment because it assures us that it will weaken the infection without overburdening the body’s resources. In populations where food is plentiful we can, in theory, mount a full immune response at any time, but Humphrey believes that the subconscious switch has not yet adapted to this – thus it takes a placebo to convince the mind that it is the right time for an immune response.
• The strangest aspect of it is that we all spend a considerable amount of time and money essentially signalling to ourselves: many of the things we do are not be intended to advertise anything about ourselves to others – we are, in effect, advertising to ourselves.* The evolutionary psychologist Jonathan Haidt refers to such activities as ‘self-placebbing.’
• According to Pierre Chandon, the branding of Red Bull, through slogans like ‘Red Bull gives you wings’ or the extreme sport competitions they sponsor, may not merely determine whether people buy the product but also how they respond to its name in a cocktail and how they interpret its effects.
• Keynes once said, ‘It is better to be vaguely right than precisely wrong’, and evolution seems to be on his side.
• ‘People do not choose Brand A over Brand B because they think Brand A is better, but because they are more certain that it is good.’
• real-life decisions have a scoring rubric that is more like darts than archery. For instance, in deciding whom to marry, aiming for the best may be less important than avoiding the worst – rather than trying to maximise an outcome, you may seek a pretty good all-round solution with a low chance of disaster.
• Blame, unlike credit, always finds a home, and no one ever got fired for booking JFK.
• you cannot describe someone’s behaviour based on what you see, or what you think they see, because what determines their behaviour is what they think they are seeing.
• in cleaning products, adding the words ‘now kinder to the environment’ to packaging may lead people to instinctively believe the contents are less effective.
• One way in which businesses can reduce their environmental footprint is to sell a product in concentrated form, which reduces packaging and distribution costs, and can also reduce the volume of chemicals used.
• One characteristic of humans is that we naturally direct our attention to the upside of any situation if an alternative narrative is available, minimising the downside.
• When you think about it, it is rather strange how explicit low-cost airlines are about what their ticket prices don’t include: a pre-allocated seat, a meal, free drinks, free checked luggage – such deficiencies help to explain and destigmatise the low prices. ‘Oh, I see,’ you can say, when you see a flight to Budapest advertised for £37, ‘the reason that low price is possible is because I won’t be paying for a lot of expensive fripperies that I probably don’t want anyway.’
• People seem to like choice for its own sake. This is one reason why public services and monopolies, even when they do a good job objectively, are often under-appreciated – it is harder to like something when you haven’t chosen it.
• For instance, given the modern open-plan office and our obsession with responding to emails as quickly as possible, it might be embarrassing or even damaging to spend 20 minutes staring blankly into space. However, without this time to disengage, it is harder to practise mental alchemy.*
• The overly simplistic model of advertising assumes that we ask ‘What is the advertisement saying?’ rather than ‘What does it mean that the advertiser is spending money to promote his wares?’, even though we clearly use social intelligence to decode the advertising we see.
• This is not irrationality – it is second-order social intelligence applied to an uncertain world. By using a simple economic model with a narrow view of human motivation, the neo-liberal project has become a threat to the human imagination.