In Dan Ariely’s book, Predictably Irrational, he comments on an advertisement for a subscription to The Economist. I have attached it below. See if you can notice anything unusual. The first offer − the Internet subscription for $59 − seems reasonable. The second option, the $125 print subscription, seems a bit expensive, but still reasonable. But the third option − a print and Internet subscription − is $125! Who would want to buy the print option alone when both the Internet and the print subscriptions are offered for the same price? Is this a case of brilliance or incompetence? We could view it as a typographical error, but perhaps that would be too simplistic. Ariely is convinced that this is a case of manipulating the consumer. “I am pretty certain that they wanted me to skip the Internet-only option (which they assume would be my choice since I was reading the advertisement on the Web) and jump to the more expensive option: Internet and print,” he says. There is something unusual in human behaviour in that we rarely choose things in absolute terms. We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another and estimate value accordingly. We love the idea of getting a deal, even if, at times, it means that we purchase something we don’t want or need. I think we can take two important messages from this:
- People can only see value in relative terms. Our wealth is relative to that of our neighbours. Our happiness is relative to the perceived happiness of our neighbours.
- Sometimes it’s hard to decipher whether we are surrounded by brilliance or incompetence.