A few days ago we wrote the nice people at Whole Foods about some ideas for doing experiments together.  These were going to be experiments on taste perception, willingness to pay, and on how we get people to eat healthier and enjoy more fruits and vegetables.

Here is the official response we got back:

Thanks so much for considering Whole Foods Market for this opportunity…. While the concept is quite interesting and the subject matter is aligned with our stores, we will unfortunately be passing on this opportunity at this time.

Thanks so much for considering us and please don’t hesitate in reaching out to us in the future.

Best regards,

Michael

What annoys me is the combination of  “aligned with our stores” and “no.” And of course it is not just Whole Foods that is in this boat.  Companies in general are willing to spend lots of money on consultants, they are willing to spend lots of money on gambling that their intuitions are correct, and sometimes they even pend money on focus groups.  But, when it comes to testing things empirically, the typical answer is “interesting, but  not for us.”

I suspect that the reason for the reluctance to engage in experiments is that no one (for example Michael from Whole Foods) wants to take any risks.  Everyone just wants to do their job.  Because of that companies continue to behave in the same way without taking any new interesting directions….  very sad.

Sorry about this post, but I had to vent somehow.

DUKE (US)—Given a choice between spending a token to get their absolute favorite food or spending it to have a choice from a buffet of options, capuchin monkeys will opt for variety.

In fact, they’ll even eat a less-preferred food from that buffet when the favorite food is on it. They choose variety for variety’s sake.

The choices made by these captive-bred monkeys in an Italian research facility seem to show some innate desire to seek variety, says Dan Ariely, the James B. Duke Professor of psychology and behavioral economics at Duke University.

In a series of experiments Ariely conducted with colleagues at the Istituto di Scienze e Tecnologie della Cognizione in Rome, the eight monkeys first had to be taught that the abstract tokens, such as poker chips, plastic cylinders and metal nuts, represented different kinds of choice. With training, the tokens were associated with being able to buy one piece of the most-preferred food, or being able to buy one piece from an assortment of foods that included the most-preferred food.

Lead author Elsa Addessi has used this token method before with this troop of capuchins, who are on public display as well as being used in non-invasive cognitive experiments.

“Economically, the tokens should be equivalent, because they both give you the food you like,” Ariely says.

But once they had the hang of it, the monkeys as a group chose to use the variety tokens and not the “single-food-tokens.” Moreover, once they chose the variety tokens the monkeys also didn’t always take the most-preferred food when it was offered as part of the variety assortment. What this means is that they prefer variety for variety’s sake and are willing to eat food they like less to satisfy their desire for variety.

The work appears online in Behavioural Processes.

The implications of this simple experiment shed some light on consumer behavior, Ariely says. Earlier work on variety-seeking has found that people eat 43 percent more M&M candies when there are 10 colors in the bowl instead of just seven.

“People choose variety for variety’s sake,” Ariely says. “They often choose things they don’t even like as well just for the variety. We knew about this, so the interesting thing was to figure out how basic it is.”

The behavior of the capuchins, which are native to South America, “suggest that there’s some inherent basic strategy for variety,” Ariely explains. In the wild, variety seeking may help ensure a nutritionally varied diet.  It is also possible, the authors suggest, that variety-seeking contributed to the rise of bartering and then abstract money in human society.

At the same time, Ariely is somewhat puzzled that humans can get stuck in a rut and not seek more variety. “Ask yourself: How many new things have you tried lately? Have you tried every cereal in the cereal aisle?” It may be that you’re enjoying a daily bowl of a cereal that you would rate as an 8, when just a few feet away on the shelf there is a cereal you’d rate as a 9, but you’ve never tried it.

Businesses can push variety on customers with assortment packs, Ariely suggests, and vicarious experiences like the Food Network can encourage exploration as well.

“How do we get ourselves to explore? Even monkeys do it—so maybe we should also try more variety.”

The research was supported by the Istituto di Scienze e Tecnologie della Cognizione and Duke.

A few months ago I attended a conference held by the American Council for an Energy-Efficient Economy. One of the interesting things they noted this year was about their lunch offering.

You might be surprised to know that meat production, between raising, processing, packaging, and preserving meat uses a lot of energy. In fact, Michael Pollan, author of The Omivore’s Dilemma once asserted that “A vegan in a Hummer has a lighter carbon footprint than a beef eater in a Prius” (it turns out that this was a bit of an exaggeration).

If you’ll note in the picture below, it seems that in this meeting (2009) the council was able to convince attendees to switch to a vegetarian lunch.

The trick, as I’ve blogged about before, was making the vegetarian option the default option! For the past two years, the council did not have any default and the vast majority of the attendants picked the meat option. This year they set up the vegetarian option as the default, and this yielded a more environmentally friendly results, with a mere 20 percent insisting on having their steaks (see the column for 2009).

The other good news is that the vegetarian option was also (in this case) more tasty and healthy.

What if on your next coffee run, you discover that Starbucks has started running on the honor system? All the baristas are gone, and in their place, you find Tupperware filled with coins and bills. Would you pay for your daily soy Latte? Or would you “forget” to shell out the five bucks? Be honest.

This, of course, is only a thought experiment, as I doubt Starbucks will be adopting the honor policy anytime soon. But in another part of the world, it’s a real question that residents are facing on a daily basis. As the New York Times recently reported, the attorney general’s office in Indonesia has been opening thousands of “honesty cafes” as part of its anticorruption campaign.

The idea is that these cashier-free cafes will teach people to be honest and curb the country’s corruption problem (which pervades business, politics, and education) by inducing residents – especially the young – to get into the habit of practicing honesty. As the Times reports, “…the cafes are meant to force people to think constantly about whether they are being honest and, presumably, make them feel guilty if they are not.”

It’s a laudable plan, and a lovely feel-good idea, but will it work? I have my doubts.

First I think that people will also cheat to a certain extent in these honesty cafes (as they do in our experiments). In fact, according to one Indonesian student, they already do: “Some of my friends don’t pay the right amount.”

But that’s not the worst of it. I worry that these cafes won’t just fail to discourage cheating – they will actually lead to more of it. In some of our research, we found that cheating on one occasion makes it easier for people to cheat again on a later task, because it alters their self-concept. (Think of dieting as an analogy: once you break your diet once, it’s that much easier to say, “Oh what the hey, cut me a slice of that chocolate cake; I’ll count calories again tomorrow.”)

With honesty cafés widespread, residents will have more temptations to cheat, more occasion to cheat, and maybe this will make it such that they will find it easier to cheat again in other contexts.

Maybe these cafes are a good idea, maybe it will not have any effect, but I worry that it might make things worse.

Our prehistoric ancestors spent much of their waking hours foraging for and consuming food, an instinct that obviously paid off. Today this instinct is no less powerful, but for billions of us it’s satisfied in the minutes it takes to swing by the store and pop a meal in the microwave. With our physical needs sated and time on our hands, increasingly we’re finding psychological outlets for this drive, by seeking out and consuming concepts.

Conceptual consumption strongly influences physical consumption. Keeping up with the Joneses is an obvious example. The SUV in the driveway is only partly about the need for transport; the concept consumed is status. Dozens of studies tease out the many ways in which concepts  influence people’s consumption, independent of the physical thing being consumed. Here are just three of the classes of conceptual consumption that we and others have identified.

Consuming expectations. People’s expectation about the value of what they’re consuming profoundly affects their experience. We know that people have favorite beverage brands, for instance, but in blind taste tests they frequently can’t tell one from another: The value that marketers attach to the brand, rather than the drink’s flavor, is often what truly adds to the taste experience. Recent brain imaging studies show that when people believe they’re drinking expensive wine, their reward circuitry is more active than when they think they’re drinking cheap wine – even when the wines are identical. Similarly, when people believe they’re taking cheap painkillers, they experience less relief than when they take the same but higher-priced pills.

Consuming goals. Pursuing a goal can be a powerful trigger for consumption. At a convenience store where the average purchase was $4, researchers gave some customers coupons that offered $1 off any purchase of $6, and others coupons that offered $1 off any purchase of at least $2. Customers who received the coupon that required a $6 purchase increased their spending in an effort to receive their dollar off; more interestingly, those customers who received the coupon that required only a $2 purchase to receive the dollar off actually decreased their spending from their typical $4, though of course they would have received their dollar off had they spent $4. Consuming the specific goal implied by the coupon – receiving a savings on a purchase of a designated amount — trumped people’s initial inclinations. Customers who received the $2 coupon left the store with fewer items than they had intended to buy.

Consuming memories. One study of how memories influence consumption explored the phenomenon whereby people who have truly enjoyed an experience, such as a special evening out, sometimes prefer not to repeat it. We might expect that they would want to experience the physical consumption of such an evening again; but by forgoing repeat visits, they are preserving their ability to consume the pure memory – the concept – of that evening forever, without the risk of polluting it with a less-special evening.

While concepts can influence people to consume more physical stuff, they can also encourage them to consume less. Offering people a chance to trade undesirable physical consumption for conceptual consumption is one way to help them make wiser choices. In Sacramento, for example, if people use less energy than their neighbors, they get a smiley face on their utility bill (or two if they’re really good) – a tactic that has reduced energy use in the district and is now being employed in Chicago, Seattle, and eight other cities. In this case, people forgo energy consumption in order to consume the concept of being greener than their neighbors.

We suggest that examining people’s motivations through the lens of conceptual consumption can help policy makers, marketers, and managers craft incentives to drive desired behavior – for better or for worse.

by Dan Ariely and Michael I. Norton

The full paper on which this article is based is available here.

February 19th was the one-year anniversary for the publication of Predictably Irrational.

To celebrate I called the chef at Rue Cler — Jason Bissey — and asked him to make an irrational dinner for us.

Here is what he came up with:
As soon as we sat at the table they gave us the check and thanked us for coming — asking us to come again soon.

Next, we each got a randomly chosen dessert accompanied by cappuccino & espresso served in wine glasses.

Jason stopped by a few minutes later, spilled some wood chips on the floor, handed me a broom & dustpan and asked me to sweep the floor (which I did, and I did a good job at it).

For the entrée: they asked who didn’t eat seafood and who didn’t eat pork and made sure to give the person who didn’t eat seafood the scallops and the person who didn’t eat pork the pork dish.

The appetizer was next.  It was delicious but a few seconds after I started eating Jason came out of the kitchen and as he walked by, he helped himself to a few of the shoestring onions from my plate and just keept on walking.

Soup and salad were next. We were given large serving spoons to eat the soup with and very, very small forks for the salad.  The server stopped by a few times to make sure that everything tasted horrible and that we were having a miserable time.

At the end, she asked who had the scallops and then said “Well you’ll be needing these” as she handed those who had the scallops an Imodium AD pill in a tiny plastic cup (an Antidiarrheal medicine).

Jason – Thanks a lot. I don’t think we will forget this meal for a long time.

Can it be that adding food makes people believe they are eating less?

A recent study by Brian Wansink and Pierre Chandon report that this can indeed be the case (this version of the study was done with John Tierney of the NYT)

Half of the people were shown pictures of a meal consisting of an Applebee’s Oriental Chicken Salad and a 20-ounce cup of regular Pepsi and they were asked to estimate the amount of calories in the entire meal. The other participants were shown the same salad and drink plus two Fortt’s crackers prominently labeled “Trans Fat Free.” The crackers added 100 calories to the meal, but given that they were “diet” how will their presence influence the estimated amount of calories in the entire meal?

The first group estimated that the meal contained 1,011 calories, which was a little high. The meal actually contained 934 calories — 714 from the salad and 220 from the drink.  But, the second group  estimated the total amount of calories to go down.  Now the average estimate for the whole meal was only 835 calories — 199 calories less than the actual calorie count, and 176 calories less than the average estimate by the other group for the same meal without crackers.

The original study was interpreted as a halo effect of items labeled as diet.  I suspect that this is correct, but I think that it is also possible that people have a hard time computing totals and that instead they compute averages – which makes the estimation when the crackers are present to be lower.

When the server drops off the check at the end of a meal, people often scramble to figure out the norms for payment. Do we each pay for what we ordered? Do we split the bill evenly even if John had that extra glass of wine and the crème brûlée?
Luckily, findings from behavioral economics can help answer this burning question. It turns out that one person should pay the entire bill, and that the person paying should alternate over time. Here is the reason: (more…)

Ezra Klein just posted an interesting observation about the new proposal by Burger King to serve up the world’s most expensive burger that will cost a whopping £85.

This burger will contain top-quality Kobe beef from Japan. And instead of ketchup and cheddar, it will be garnished with foie gras and rare blue cheese.

What Ezra suggests is that while it is clear that almost no one will buy the burger, the very fact that Burger King has it on the menu could make people think more highly of the quality of the burgers at Burger King—even the 99 cent burgers.

One other effect of this expensive burger could be that it will shift people’s willingness to spend money at Burger King. If the standard for spending before this new up-scale product was £5, perhaps after this introduction, spending £7.5 will seem much more reasonable (at least relative to the £85 burger).

I would love to see the effect of this new offer.

Irrationally yours,

Dan

Ask people if they’d like a 15-cent Lindt truffle or a one-cent Hershey’s Kiss, and 73% buy the truffle. Drop a penny off the price of each – a 14 cent truffle or a free Hershey’s Kiss – and only 31% choose the Lindt. Is eating the chocolate you don’t really want worth saving a penny? Probably not. But in the economics of life, we often show bad judgment, like allotting too much value to things that are free. In Predictably Irrational, behavioral economist Dan Ariely goes for a fascinating romp through the science of decision-making that unmasks the ways that emotions, social norms, expectations and context lead us astray. Mixing anecdote and social-science experiment, he illustrates common problems, like the tendency to keep our options open, even when one is demonstrably better. Consider the MIT student who has a horrible time committing to one of her two suitors – despite her clear preference for one of them. And relativity gets us time and again: coffee in a nice setting tastes better; a person looks more attractive once a similar but less good-looking person enters the room. Understanding these irrationalities, Ariely writes, is the first step in overcoming them.