For Goodness's Sake...
... greater cost does not equal better product!Or at least, not always.
Why on earth do people--and here I mean lots and lots of people--go ice skating, repeatedly, at Rockefeller Center? Bryant Park is less than a mile up the road, right on the orange subway line (and one block from Times Square, which is to say, one block from every other Manhattan line but the 4-5-6); it's at least as easy to get to as the Rockefeller ice rink.
Price of an ice skating session at Rockefeller Center: $13 (winter and spring, but not during the "Holiday Season" when prices are higher)
Price of an ice skating session at Bryant Park: $0
Not being a financial idiot: priceless? I mean, there are plausible real benefits to going to Rockefeller Center once. It's a storied holiday activity, there's the view of the big Christmas tree (and maybe this just warms your heart, I don't know), there's getting to say you've done it if you're a tourist, there's the fact that your kid really wants to skate when you take her there and, like any decent parent, you like to indulge your kid sometimes. But after doing the Rockefeller Center thing once, don't you think native New Yorkers should go somewhere else for their skating pleasure?
posted by Skay @ 5:49 PM
3 Comments:
If there's one lesson we can draw consistently from American consumerism, it is that people generally behave irrationally, and specifically spend irrationally. This should be a lesson for economists, a reminder that real-world markets are not composed of rational automatons.
It's perfectly plausible that a rational automaton could believe that Rockefeller Center is $13 dollars better than Bryant Park. As Skay says, it's a "storied holiday activity." I can't assess this myself; I've never skated in NYC, and I'm not much of a skater anyway.
The only time that economists assume that real-world markets are composed of rational automatons are when they're teaching first-year economics to undergraduates. Beyond that, their methods and theories get quite a bit more sophisticated...
I dunno, Donovan...
I mean, you're definitely right that a rational automaton could believe the Rock to be $13 better than Bryant Park. And you're also right that real economists dealing with real problems have sophisticated models indeed. But they're still highly causal, highly assumptive, and highly rational models.
Even economic models which seek to take seeming contrary-interest into account do it in a very careful and logical way that presumes an underlying move towards one's own best-interest. I recall one study in which the premise was something along the lines of, "presume people have a 90% chance of acting in their own best interest in this scenario." Of course the researchers defined what one's "best interest" was. The 90% was meant to take into account the idea that some people didn't agree with the popular assessment of relative values.
But here's the important point. These economists needn't have believed that the rogue 10% were acting contrary to their own best interest, only that they defined what they wanted differently than the others. The 90% was a slightly more complex way of accounting for the fact that 10% of the population were even more interested in feeling generous, say, than in keeping the $50 they'd found on the ground (or that some of those people had enough money to make the bending over to pick it up not worth their time, or whatever). They weren't accounting for irrational people saying--"bah! $50 would be excellent, but I just don't care enough to keep it today," but rather for folks who had some even more convincing reason NOT to pick it up and take it home than they did TO pick it up.
I do think economists tend to fall into a trap of thinking (perhaps not wrongly) that people always act in ways that help them maximize whatever they think their interest to be. And while it's true that the models get far more complicated (you can account for vying interests, you can count for religious and ethical sensibilities as interests (or you can try), you can hope to account for one's interest in having a kid or breathing clean air or whatever), it's not precisely true that economists have sophisticated (or unsophisticated) ways to deal with human irrationality.
My own take--and one that is not, I think, immediately obvious--is that people really are irrational sometimes. It comes out of a lack of consideration. We don't act contrary to our best interests when we stop to think about what we're doing and what our interests are, but we often, often, OFTEN don't think. And while at some basic level I'll still pull back my hand if I unthinkingly place it on a stovetop, I'm not likely to eat a full breakfast next Tuesday if I always skip the morning meal on my way to work. This isn't actually because I think the extra 10 minutes of sleep is even more of an opportunity than the breakfast I'm foregoing. Rather, it's because I've got a habit, about which I don't think, of getting up at about 8:35, showering, clothing myself, and running out the door--not having eaten, not having excercised, not having run up and down the stairs eight times, not having tried to fix my computer, and not having read a novel. I could have done any of those things, but it's not because of any sort of rationality that I did not. It's because I never thought of them. And we can fail to think of the mundane and seemingly usual (breakfast) as well as the strange and unlikely.
Post a Comment
<< Home