Fat Tire’s first prize: an obsolete bike. The rationality of costly signaling.

Fat Tire Beer is holding a contest, and first prize is an old-fashioned bicycle. It is a cumbersome and heavy one-speed bike that lacks most of the useful features found on modern bicycles. What does it have going for it? Nothing much worth my while. I buy my bicycles for performance, features and functionality, not looks. Others would say that the Fat Tire bicycle has an unique style worth coveting. I know a woman who recently paid a large amount of money for a "retro" bicycle much like the one in the photo. She bragged about her bicycle only in terms of what it looked like, and seemed to get irritated when I asked her whether she would miss some of the useful features found in most modern bicycles, features such as multiple gears, high-tech gear-shifting, feather-light frame, and front or rear suspension. It appears that Fat Tire Beer is looking for customers like the woman I just described, people who are obsessed with the looks of a bicycle rather than its functionality. I recently posted on Geoffrey Miller's terrific new book, Spent. At page 97, Miller discusses the "signaling value" of many modern products. Miller points out that modern corporations work hard to avoid competition based upon objective features that can be compared. Fat Tire Beer, for example, did not choose to offer a modern bicycle that could easily be compared to the many other bicycles currently being sold. Instead, the company chose to offer an old-fashioned bike that would signal a certain trait for the owner and his/her friends/acquaintances. Modern corporations

Use advertising to create signaling systems--psychological links between brands and the aspirational traits that consumers would like to display. Although these signaling links must be commonly understood by the consumer's socially relevant peer group, they need not involve the actual product at all. The typical Vogue magazine ad shows just two things: a brand name and an attractive person . . . there is a hidden rationality at work--the rationality of costly signaling. What matters in most advertising is the learned association between the consumer's aspirational traits and the company's trademarked brand name--the fountainhead of all profitability.
Therefore, don't waste your time trying to figure out what obsolete styles of bicycles have to do with beer. The bicycle featured on the label of Fat Tire Beer has nothing to do with the taste or quality of the liquid in the bottle. Rather, buying Fat Tire Beer is an opportunity for a consumer to display to others that the consumer can afford a premium beer. The bicycle on the label gives consumers a further opportunity to suggest that tradition is more important than functionality. Those who buy Fat Tire Beer let the beer do their talking for them: "I'm a person who values tradition over functionality." That's my guess. I wouldn't accept that cumbersome and sparsely-featured contest bicycle even if someone offered it to me for free, because I know less-costly, less wasteful and more effective ways of convincing others that I often value tradition. It involves hard work and no gimmicks. It requires that you willingly put your life under a microscope, that you repeatedly show rather than tell, and that you show your values in ways other than through conspicuous consumption.

Continue ReadingFat Tire’s first prize: an obsolete bike. The rationality of costly signaling.

Our insane drug war, revisited

Mother Jones has hammered our drug war with undeniable facts . . . well, undeniable unless you are a government official in charge of the "drug war." In fact, as authors Monika Bauerlein and Clara Jeffery advise us, the entire history of the U.S. "war on drugs" is actually a governmental war on truth.

[T]he drug war has never been about facts—about, dare we say, soberly weighing which policies might alleviate suffering, save taxpayers money, rob the cartels of revenue. Instead, we've been stuck in a cycle of prohibition, failure, and counterfactual claims of success. (To wit: Since 1998, the ONDCP has spent $1.4 billion on youth anti-pot ads. It also spent $43 million to study their effectiveness. When the study found that kids who've seen the ads are more likely to smoke pot, the ONDCP buried the evidence, choosing to spend hundreds of millions more on the counterproductive ads.) What would a fact-based drug policy look like? It would put considerably more money into treatment, the method proven to best reduce use. It would likely leave in place the prohibition on "hard" drugs, but make enforcement fair . . . And it would likely decriminalize but tightly regulate marijuana, which study after study shows is less dangerous or addictive than cigarettes or alcohol, has undeniable medicinal properties, and isn't a gateway drug to anything harder than Doritos.

If you want to see a bunch of demoralized people wasting time, park yourself at your local drug court and watch a judge slapping faux sentences on marijuana users and small-time peddlers. Everyone involved knows that the system is a joke--a money sucking time-wasting absurd joke that ruins lives, because every so often someone gets ripped from his or her family, thrown into prison for years. The crime (just to remind you) is that these users wanted to feel pleasure. And sometimes its more absurd: the criminal wanted to escape stress or anxiety and he didn't have a fancy health insurance policy that would allow a doctor to hand him legal pills that do the same thing. And maybe he didn't want to legally rot out his liver with alcohol, which is the other way of getting a similar high. As I've made clear many times, I am not promoting drug use of any kind. I just had serious surgery and I could have loaded up on narcotics that were made available to me, but I didn't because I don't want that or need that. I'm a lucky person in that regard. I am not interested in altering my mind through chemicals. I am trying to convince my daughters that they should strive for clean drug-free living. But I am aware that many people want or need relief from stressful lives (or from their own misfiring brains) or maybe they want the option to simply chill out. I certainly don't want to stand in their way any more than I would tell a patient to not take those pills prescribed by her doctor. It's time to stop spending billions of tax dollars on a drug war that doesn't stop drug use and only ramps up violence, destabilizes governments and steals critical services from taxpayers. The drug war is highly immoral, but we won't be able to fix the situation until we have the courage to have an honest conversation. Related posts:

The most harmful thing about marijuana is jail (reporting on the opinion of a conservative judge).

The Economist's argument to stop the war on drugs. (includes the mind-scrambling statistic that the U.S. spend $40 B each year trying to stop the use of illegal drugs).

Johann Hari's argument that It's time to stop the drug war. (more shocking statistics)

It isn't dangerous to use marijuana. (Really, no more dangerous than Doritos)

Continue ReadingOur insane drug war, revisited

Geoffrey Miller’s “Spent”: an evolutionary psychology romp through marketing and consumerism

I've repeatedly written about Geoffrey Miller based on the many provocative ideas presented in his earlier book, The Mating Mind. (e.g., see my earlier post, "Killer High Heels"). A gifted and entertaining writer, Miller is also an evolutionary psychologist. His forte is hauling his scientific theories out into the real world in order to persuade us that we didn't really understand some of the things that seemed most familiar to us. In his new book, Spent, Miller asks why we continuously buy all that stuff that we don't really need? Miller's answer is twofold. Yes, human animals have been physically and psychologically honed over the eons this to crave certain types of things over others to further their chances at survival and reproduction. That's only half the answer, however. We must also consider "marketing," which is

The most important invention of the past two millennia because it is the only revolution that has ever succeeded in bringing real economic power to the people. . . . it is the power to make our means of production transform the natural world into a playground for human passions.

Is the modern version of marketing a good thing or a bad thing? The answer is yes.

On the upside it promises a golden age in which social institutions and markets are systematically organized on the basis of strong purple research to maximize human happiness. What science did for perception, marketing promises to do for production: it tests intuition and insight against empirical fact area market research uses mostly the same empirical tools as experimental psychology, but with larger research budgets, better-defined questions, more representative samples of people, and more social impact.

Here is a July 2009 interview of Geoffrey Miller by Geraldyne Doogue of the Australian Broadcast Network: Most of us are quite familiar with the downside of marketing. It encourages us to buy things we don't really need. But marketing doesn't merely clutter up our houses and garages; it corrupts our souls:

Continue ReadingGeoffrey Miller’s “Spent”: an evolutionary psychology romp through marketing and consumerism

Modern credit card agreements: 29 pages of “tricks and traps”

Elizabeth Warren, the TARP Oversight Chair was on the Rachel Maddow's show discussing the aggressive anti-consumer practices of credit card companies, and warning that the credit card industry is about to try to kill federal efforts to regulate the industry. She reminds us that in 1980 a credit card agreement was only about a page long. Now credit card agreements are 30 pages long, full of "tricks and traps."

MADDOW: Are you worried that the [credit card] industry's going to be about to kill [credit card reform legislation] in the crib? Reporting is that it's their top priority to get rid of it. WARREN: My gosh! I have to tell you, it's like they're stampeding in the halls already in Washington. the Gucci loafers. These guys have built up a huge war chest, they've been interviewing public relations firms to see who can come up with the next Harry And Louise ad to explain to the American people why they're better off with credit cards that nobody can read, hundreds of pages of mortgage documents that nobody can read...the idea is you're better off with how things are...forget all that stuff the happened over the last few years. And we promise to keep things up just like we did before. I just can't believe they're trying to sell that to the American people.
You can read much more on this topic at Jason Linkins' post at Huffpo's new Lobby Blog.

Continue ReadingModern credit card agreements: 29 pages of “tricks and traps”

Good enough is good enough

I’m enjoying my newly and consciously chosen path: things don’t need to be perfect. Not that I ever really was a perfectionist. But especially when it comes to consumer purchases, I’m much less a perfectionist than I ever was. Here are a couple cases in point. The rear (electric) window of our ten year old car no longer goes up and down. My immediate thought was to have it fixed. I got an estimate: $270. Gad. My wife and I decided that we can do without that window going up and down (even though my daughters (who sit in the back) would prefer that it work. $270 is a lot of allowance money. I asked the repair guy how much it would cost to make the window permanently stay up (because it kept sliding down). He said that he could do it for $100. I turned down that offer, went home and glued it shut. Far from perfect, though quite satisfactory. A friend visited today. The lock on her car’s passenger-side door was broken. She said: “Passengers can get into the car on the other side.” She added that not fixing minor things is a big time saver. Why make appointments and burn hours fixing something that isn’t really a priority? These car stories won’t resonate for may people. I’ve known dozens of people who freak out if there is even a single little scratch on their car. Nor would they ever try to fix it themselves. They will run it to the dealer, especially if someone else was at fault. A man accidentally collided with our other car 6 months ago. I suggested that I find a body shop that could bang it into shape, but said that I didn’t want it to be “like new.” After all, the car is 8 years old. I found a shop that straightened out the bends and sprayed over the scrapes for $400, instead of getting a “like new” job that would have cost $1,500. It’s good enough for me. There are days when I intend to get x number of things done. I’ve found that my life goes much more smoothly if I let some of those things drop off the list, unaccomplished.

Continue ReadingGood enough is good enough