Christina Binkley had an terrific article last month in the Wall Street Journal on “How Luxury Brands Alter Shoppers’ Price Perceptions.” We have excerpted portions of the article below.
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What is too much to spend on a suit?
The question weighed on Barry Schwartz as he scanned the racks at Boyds men’s store in Philadelphia, which were laden with $3,000 Brioni suits. “Their prices were just out of the world,” recalls Mr. Schwartz, a professor of psychology at Swarthmore College.
We’ve all been there: A window display or a recommendation lures us into a store — and we face unexpectedly astronomical price tags. It seems to happen more often these days as many luxury brands — selling everything from $14,000 Ralph Lauren handbags to $899 Bugaboo baby strollers and $6,900 Beefeater barbecue grills — push their top price points higher than they’ve ever gone before. What’s priced below falls into that ever-expanding category: “affordable luxury.”
Some people cut and run when confronted with prices that seem crazy. But many of us experience a sudden emotional-mathematical transformation. We set a new ceiling for a “reasonable” price. Disinclined to go all the way to buy the trophy, we instead settle for a consolation prize. Mr. Schwartz, a jeans-wearing type, walked out of Boyds with a suit that cost merely $800 — the most he’d ever spent on an item of clothing.
“If you’re in that world long enough, $800 stops even feeling like a lot of money,” Mr. Schwartz says.
This concept is one of the reasons for the proliferation of $300 designer sunglasses these days. The fact that Ralph Lauren is charging $14,000 or so for an alligator “Ricky” handbag makes it easier for a consumer to justify in her mind paying $300 for a rather simple sweater. Many Chanel sunglass owners are actually would-be owners of Chanel suits. Something similar has happened to many owners of Tiffany keychains, Prada legwarmers, Coach wallets, and Frette tea towels.
When shoppers are confronted with prices they can’t afford, a smart retailer will “move you right along to where you can salvage your pride,” says Dan Hill, president of Sensory Logic, a Minneapolis consulting company that helps companies explore their sensory and emotional connections with customers.
Pride, Mr. Hill points out, “is a mixture of anger and happiness.” That pretty much describes the whole shopping experience at those moments when we’re outpriced (anger), then soothe ourselves with a smaller splurge (happiness).
* * *Given that accessories like sunglasses, fragrances, and logoed belts drive the sales of companies like Gucci and Louis Vuitton, such consolation prizes account for a very sizable chunk of the luxury business these days.
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As for Prof. Schwartz, with his $800 suit, “I got sucked in. And I knew what was happening,” he says. . . .
Mr. Schwartz calls the top-priced goods “anchors.” Anchors, he says, set the ceilings on prices of objects that don’t have a clear value.
That is just about everything in luxury goods and fashion. In fact, that’s one reason why some in the luxury fashion industry are irritated with retailers like Target and Zara: They’re seen as setting the ceilings too low.
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To read this article in its entirety, click here. For a previous Situationist post discussing the effect of “irrelevant third options” on people’s political choices, go to “Irrelevant Third Options in Presidential Campaigns.” For an earlier post discussing aspects of Barry Schwartz’s research, go to “Just Choose It!”
What do the abuses at Abu Ghraib and your expanding waistline have in common? Well, if the landmark study on obesity that was just published in the New England Journal of Medicine has any validity, then the answer will surprise you.
Societal attempts to combat obesity and fight evil focus on modifying the individuals themselves through a variety of programs, penalties, and punishments. There’s a problem. If indeed, obesity and evil were solely matters of character, disposition, or metabolism, the centuries’ old struggles to resist evil and more recent medical-educational programs to combat obesity should have yielded significant reductions in both. Unfortunately, obesity is now at epidemic proportions in the U.S., while evil remains rampant across the globe.
In our culture, evil is to the flowering of bad seeds within defective people, as obesity is to the manifestation of defective genes into addictive consumption. Evil is feared as the loss of personal willpower to restrain brutishness; obesity is disdained as the failure to contain gluttony. Since the cosmic myth of Angel Lucifer turned into the Devil for his sins, evil has been seen as emanating from within. Traditional, medical conceptions similarly trace the origins of obesity to the person’s interior — negative genetic endowment or reactions to a dysfunctional childhood. Obesity is not evil, but both share a common undetected feature. Why has victory been so elusive in these “wars” against the baleful and the bulging?
The answer: we have misidentified the enemy. Social science, like history, has demonstrated that the most powerful causal forces behind everything from prisoner abuse to ‘supersizing’ are located less in conscious individual choices and more in the situational and systemic factors that envelop individuals at given times and places. The prevailing notion that personal, inner dispositions are the primary causal factors involved in bad behavior or obesity needs to be reexamined.
In 1971, I set out to do just that. Normal, healthy young men participating in a simulated prison experiment quickly became abusive, even sadistic, in the guard role, or emotionally disturbed, in the prisoner role. This experiment, and related research, revealed the overwhelming power of situational forces on behavior. Most people are social animals who are influenced by what others say and do, and by the values they model. As my study unveiled, people can be led into evil ways. By the same token, I would expect other human actions arising out of lack of restraint to be similarly driven by social factors that we have tended to ignore or underestimate. But obesity? Can social influences expand our body-mass index enough to push us over the line into obesity?
A remarkable study in The New England Journal of Medicine (July 26, 2007) provides solid evidence for the power of social interaction as a major contributor to obesity. Researchers Nicholas Christakis and James Fowler tracked the obese status of more than 12,000 people over 32 years. They identified the social networks for each of these individuals — their families, spouses, friends, and neighbors.
After charting the body-mass index of those geographically near and far, of both genders, smokers and non-smokers, and by ruling out stable factors related to childhood experiences and genetic endowment, the researchers came to this uncommon-sense conclusion. “Network phenomena appear to be relevant to the biologic and behavioral trait of obesity, and obesity appears to spread through social ties . . . . The spread of obesity in social networks appears to be a factor in the obesity epidemic.”
Consider these findings:
Family: Among brothers, one’s obesity increases the chance of the other also becoming obese by 40 %. Among sisters, the effect may be an even greater 67%. Obesity in a sibling of the opposite sex had no causal effect on the other’s chances of becoming obese. Married couples: Husbands and wives influenced each other’s likelihood of becoming obese, once either was obese, by as much as 44%. Friends: When one target person identified another person as a friend, then his or her chances of obesity showed a 57% increase — if that friend became obese. There was no effect when the other person did not also consider the target person as a friend. However, when the relationship was between “mutual friends,” then the risk of obesity soared up to an amazing 171%. Geography: It made no difference on this spread of obesity whether family or friends were near or far, or if an immediate neighbor became obese.
The study also showed that these effects were the product, not of behavioral imitation, but of perceived social norms. Having a close friend or family member who is obese made obesity more socially acceptable — rather than stigmatized.
The researchers conclude: “The observation that people are embedded in social networks suggests that both bad and good behaviors might spread over a range of social ties. This highlights the necessity of approaching obesity not only as a clinical problem but also as a public health problem.” And that brings us back to the conceptual symmetry between obesity and evil.
Recognizing evil actions as a vector of “social disease,” whose origins may be found in social networks, also makes it a public health problem. My analysis (in The Lucifer Effect) of evils perpetrated by American soldiers at Abu Ghraib Prison adopts a similar focus on understanding how those abuses occurred, and what can be done to change situations and systems that foster such transformations of once healthy, good young soldiers into perpetrators of evil.
If we can accept that obesity and evil are largely the consequence of common causes found in social situational forces, not in personal defects, then maybe we can begin to imagine new models and methods for containing them. We need strategies that do not drag us back to the Inquisition’s witch-hunts. We need to shift resources now used to identify and punish “bad apples” toward creating more constructive programs designed to identify and clean up “bad barrels,” and for disinfecting those systems responsible for constructing and selling them.
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This post echoes a theme that has been explored at length by Situationist Contributors, Adam Benforado, Jon Hanson, and David Yosifon, who devoted a sizeable article to the mistaken but dominant dispositionist attributions made regarding obesity and the actual situational sources of the epidemic. To access their article, entitled “Broken Scales: Obesity and Justice in America,” click here. For another Situationist post summarizing the study discussed above, go to “Situational Obesity, or, Friends Don’t Let Friends Eat and Veg.” For an NPR, Morning Edition transcript and audio report about the study click here. For a list of previous posts looking at other situational causes of obesity, click here. For some of my previous Situationist posts examining evil, take a look at “From Heavens to Hells to Heroes,” (Part I & Part II) and “Situational Sources of Evil” (Parts I, II, and III). To learn more about my book, The Lucifer Effect and work related to it, click here.
Whenever we witness something harmful or unexpected, we humans look to make attributions of causation, responsibility, and blame. Social psychologists have been studying the way we make those attributions for the last half century. Part of that research, known as attribution theory, focuses on how we draw inferences about how much control people exert over their behavior: the more control they appear to exert, the more we hold them responsible or blameworthy for the consequences of their actions. To assess control, we draw inferences about, among other things, whether the person acted volitionally or intentionally and about the person’s motivation. When we think an injurer acted intentionally and maliciously we attribute blame — which is accompanied by a desire to punish the injurer and to compensate the victim.
This naive psychology of blame attributions is fairly automatic and depends on more or less instantaneous impressions. And although our attributions result from inferences of, among other things, intent and motive, we are hampered by the fact that we cannot directly access someone else’s motives or intentions (in fact, we’re not very good at ascertaining our own). And, often, the individuals who we are judging have an interest in presenting themselves as innocent — regardless of the truth of the matter. In making attributions about another person’s harm-causing actions, therefore, we are often forced to rely on imperfect external cues. Conflict between individuals and groups often emerges precisely because attributional ambiguity leads to divergent interpretations and reactions. What a victim might perceive as outrageous, an injurer might construe as merely unfortunate or even richly deserved. The legal system is caught up in these attributional contests every day. For instance, most of tort law — in doctrine and in practice — is devoted to the question of resolving competing attributional accounts for the same personal injury.
One important cue regarding someone’s intentions and motives is the number of times that they engaged in the sort of behavior that caused the harm. If a person engages in harm-causing conduct one time, we may, absent other indicia of intent, call that “an accident.” The harm elicits some emotion, but it is rarely one of intense anger toward the injurer or sympathy for the victim. If that person engages in the very same conduct a second time — particularly if the acts are temporally proximate — then automatically and instantaneously, our attributions and emotions change. In an instant, in response to behavior that is otherwise identical, we can go from relatively indifferent to indignant.
This week’s final inning in the three-game rivalry-hyped series between the Boston Red Sox and the New York Yankees illustrates this phenomenon perfectly. View the (five-minute) video below to see what we mean.
Two identical pitches. Two very different reactions on the part of the umpire, the batter, the fans, and some of the players. One fastball thrown at the batter’s head may have been an accident. But two, one after the other, seems pretty clearly intentional and maliciously motivated. Sports writer Ian O’Connor summarized his reaction as follows:
Joba Chamberlain did it on purpose. Two nuclear-powered fastballs, back-to-back, raging over the head belonging to Kevin Youkilis were indeed thrown with vile intentions. The first one, clocked at 98 mph, sounded like this: See you at Fenway in two weeks. The second one, clocked at 99 mph, sounded like this: See you in the ALCS after that.
Though never explicit in his wording, Youkilis made similar attributions after the game:
Two balls go at your head and the guy has a zero ERA and he’s around the strike zone pretty good, any man is going to go out there and think that the balls were intended to hit him in the head. I didn’t see any other pitches going that far out of the strike zone.
Of course, we can’t be completely sure if the pitcher, Joba Chamberlain, was truly head hunting. If one accident is possible, then so is two; plus we really don’t know what was happening inside Chamberlain’s head. So we look at the circumstances: “could he have been exacting revenge for something earlier in the game? What other motives did he have one way or the other?” And, in the hope of gleaning more about the interior of the black box of his mind, reporters ask the obvious questions: “did you do that on purpose?,” “what were you thinking?” and so on. To view Chamberlain’s responses to those sorts of questions watch the three-minute video below.
Did you find him convincing? Major League Baseball didn’t, at least not completely. They concluded Chamberlain was sufficiently culpable to warrant an official penalty. Much like our legal system might, the League punished Chamberlain, suspending him two games and fining him $1,000 for “inappropriate actions.” Of course, had Chamberlain menacingly pointed at his temple between the two pitches, the League would have seen more unambiguously into the black box regarding his actual intent and would therefore have imposed a much harsher punishment.
The League’s response may do little to influence the likely payback that is to follow when the Red Sox host the Yankees later this month. Throwing fastballs at the head is a serious attack, one that Red Sox pitchers will want to avenge. Still, the League has intervened in part to prevent the sort of escalating conflicts that, history proves, often occur when attributions of blame between teams or other groups fester. The fact that two sides of a conflict make their attributions in group-affirming ways is a major source of the escalation. Both sides tend to agree on one thing: “They are to blame; we are not.”
Common-law historians tell us that a primary reason for the creation and success of the common law, particularly criminal and tort law, was to serve as a substitute for the “self-help” option when one person’s acts harmed another, and divergent attributions led to escalations of violence between individuals and groups. The common law provided a relatively neutral third party — be it a judge or jury of one’s peers — who could hear the conflicting accounts and reach a fair apportionment of damages or penalty based on perceived culpability. Assuming the institution remained credible, parties tended to live with those decisions and to be less eager to resort to self-help.
The same sorts of automatic attributional tendencies and dynamics that influence how we feel about a particular player on a particular team, or even how we decide to punish tort or criminal defendants can be found in all of our interactions — small and big. They even lie at the heart of many international and global conflicts.
Indeed, the attributional inferences drawn in responses to Chamberlain’s two head-oriented pitches were surprisingly similar to the attributional inferences drawn by most Americans in response to the World Trade Center Bombings on 9/11.
When the first plane hit the first tower, there was a strong sense of sadness for the victims, but the incident was automatically presumed by most to have been an unfortunate accident. It was developing into a tragic story, but not different in kind from other large accidents. The second plane crashing into the second tower completely changed all that in an unthinking instant. An accident, over which a pilot exercised little control, turned into an intentional, deliberate, purposeful, hateful attack by terrorists on “us.” To see what we mean, view the (nine- minute) video below of news coverage of the event as it unfolded.
Two identical explosions. Two very different reactions.
It was the power of the second set of reactions that fueled, not only the national urge to rescue and assist victims, but also the widespread craving to punish the evildoers. Consider the varying reactions of President Bush to the first and second crash, as later told to Dan Balz and Bob Woodward of the Washington Post:
Bush remembers senior adviser Karl Rove bringing him the news, saying it appeared to be an accident involving a small, twin-engine plane. In fact it was American Airlines Flight 11, a Boeing 767 out of Boston’s Logan International Airport. Based on what he was told, Bush assumed it was an accident. “This is pilot error,” the president recalled saying. “It’s unbelievable that somebody would do this.” Conferring with Andrew H. Card Jr., his White House chief of staff, Bush said, “The guy must have had a heart attack.”
. . . At 9:05 a.m., United Airlines Flight 175, also a Boeing 767, smashed into the South Tower of the trade center. Bush was seated on a stool in the classroom when Card whispered the news: “A second plane hit the second tower. America is under attack.” Bush remembers exactly what he thought: “They had declared war on us, and I made up my mind at that moment that we were going to war.”
No doubt, our assessments of the intentions and motives of the evildoers were correct: The bombings were intentional and maliciously motivated. Still, there may be lessons to be learned from the Major League or from our domestic legal system. When America insisted on going to war with Iraq without meaningfully engaging the world community or taking seriously the concerns of even its allies, it was short-circuiting its best hope for avoiding regret. Maybe our leaders should be obligated to seek and defer to the judgment of relatively neutral third parties, precisely because history shows that the self-help option is as attractive as it is counterproductive. Sometimes we wisely build institutions to limit our options precisely because we know that our desire to take certain options in the future will lead to tragedy. Sometimes we wisely alter our situation because we cannot trust our disposition.
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The Situationist has a series of posts devoted to highlighting some of situational sources of war. Part I and Part IIof the series included portions of an article co-authored by Daniel Kahneman and Jonathan Renshon, titled “Why Hawks Win.” Part III reproduced an op-ed written by Situationist friend Dan Gilbert on July 24, 2006. Part IV and Part V in this series contained the two halves of an essay written by Situationist Contributor, Jon Hanson within the week following 9/11. Part VI contains an op-ed written by Situationist Contributor John Jost on October 1, 2001, “Legitimate Responses to Illegitimate Acts,” which gives special emphasis to the role of system justification. Part VII includes a video entitled “Resisting the Drums of War.” The film was created and narrated by psychologist Roy J. Eidelson, Executive Director of the Solomon Asch Center at the University of Pennsylvania.
To review a larger sample of posts on the causes and consequences of human conflict, click here. For a list of posts discussing how people attribute causation, responsibility, and blame, click here.
We all experience them. They are known as “intincts,” “gut feelings” or “gut reactions,” and they comprise immediate intuitions and emotions that seem to operate outside our conscious reasoning process.
Gut feelings can get us to do many things. They can, for instance, lead us to believe in what appears otherwise. This was famously depicted in Field of Dreams, when Terrence Man (played by James Earl Jones) assured Ray Kinsella (played by Kevin Costner and on the verge of losing his farm) that “People will come Ray, They’ll come to Iowa for reasons they can’t even fathom. They’ll turn up your driveway, not knowing for sure why they’re doing it . . . Ohhhhhhhh, people will come, Ray. People will most definitely come.”
Gut feelings can also occasionally make headlines. This past July, for instance, Secretary of Homeland Security Michael Chertoff revealed that he had a “gut feeling” that the United States would face a heightened chance of a terrorist attack over the summer.
A leading expert on gut feelings is Gerd Gigerenzer, director of the Max Planck Institute for Human Development in Berlin and author of the new book “Gut Feelings: The Intelligence of the Unconscious.” Claudia Dreifus of the New York Times recently interviewed Gigerenzer and below we have excerpted portions of the interview.
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Q:O.K., let’s start with basics: what is a gut feeling?
A: It’s a judgment that is fast. It comes quickly into a person’s consciousness. The person doesn’t know why they have this feeling. Yet, this is strong enough to make an individual act on it. What a gut instinct is not is a calculation. You do not fully know where it comes from.
My research indicates that gut feelings are based on simple rules of thumb, what we psychologists term “heuristics.” These take advantage of certain capacities of the brain that have come down to us through time, experience and evolution. Gut instincts often rely on simple cues in the environment. In most situations, when people use their instincts, they are heeding these cues and ignoring other unnecessary information.
Q:In modern society, gut thinking has a bad reputation. Why is that?
A: It is not thought to be rational. One of the founders of your country, Benjamin Franklin, suggested to his nephew that when he made important life decisions, he should do it like a bookkeeper — list all the pros and cons and then make the decision, after weighing everything. That is the classical rational approach.
Q:I make my decisions that way. What’s wrong with it?
A: In some situations, that demands too much information. Plus, it’s slow. When a person relies on their gut feelings and uses the instinctual rule of thumb “go with your first best feeling and ignore everything else,” it can permit them to outperform the most complex calculations.
Q:You are the author of a famous study on how people use instinct in investing. Why this topic?
A: Because intuition often underlies stock picking. Ordinary investors will frequently pick a company they’ve heard of before. We call this the “recognition heuristic,” and it basically means “go with what you know.” I was curious: is this effective? In the 1990s, we interviewed 360 pedestrians in Chicago and Munich. We asked if they were familiar with the names of German and American corporations traded on the stock exchange. Using the names of the most frequently recognized companies, we then made up investment portfolios.
After six months, the high-recognition portfolios, on average, gained more value than the Dow and DAX markets and some big-name mutual funds. The high-recognition portfolios did better than a portfolio we created from randomly picked stocks and another made up of low-recognition stocks. Over the years, we’ve repeated this experiment twice, in different ways. Each time, the intuitive wisdom of the semi-ignorant outperformed the calculations of the experts.
Q:Have you considered going to your pedestrians for investment advice?
A: Yes! I did that once. I invested $50,000 in high-recognition stocks picked by the least stock-savvy group we studied, those German pedestrians. Their portfolio went up 47 percent in six months, as opposed to the 34 percent gains made by the German stock market as a whole. This was during a bull market.
Q:Where can gut instincts fail?
A: Here’s an example: after 9/11, many Americans stopped traveling in airplanes and drove on highways instead. I looked at the data, and it turned out that in the year after the attacks, highway fatalities increased by an estimated 1,500 people. They had listened to their fear, and so more died on the road. These kinds of fatalities are easily avoided. But psychology is not taken very seriously by governments. Most of the research about how to combat terrorism is about technology and bureaucracy — homeland security. In this case, educating the public about their own gut reactions could have saved lives.
Q:Some of your critics say that gut instincts just aren’t scientific. What’s your answer?
A: We study these things, where intuition is good and where it’s not. One should also not overlook that in science itself, you need intuitions. All successful research scientists function, to a degree, on gut instincts. They must make leaps, whether they have all the data or not. And at a certain moment, having the data doesn’t help them, but they still must know what to do. That’s when instinct comes in.
Q:Do you think of yourself as intuitive or rational?
A: Both. In my scientific work, I have hunches. I can’t explain always why I think a certain path is the right way, but I need to trust it and go ahead. I also have the ability to check these hunches and find out what they are about. That’s the science part. Now, in private life, I rely on instinct. For instance, when I first met my wife, I didn’t do computations. Nor did she.
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For the rest of the interview, click here. For a recent BBC story on a study conducted at University College London on how snap decisions are “often correct,” click here.
We all experience them. They are known as “intincts,” “gut feelings” or “gut reactions,” and they comprise immediate intuitions and emotions that seem to operate outside our conscious reasoning process. 
The Situationist 