People Are Strange

There is an experiment in pricing where you offer people an $8 bottle of wine and a $15 bottle of wine. In this scenario, the majority of people buy the $8 bottle. But add a $50 bottle of wine to the list and you find a majority of people by the $15 bottle.

People are strange, eh?

These things make economists go crazy, but that’s just because the impression is that all economic decisions are made in a frame of reference that includes only dollars and cents. I think most people who are thinking about these things realize that the value people get from their decisions comes in different currencies. Yes, cash makes a difference, but you’ll also buy the $15 bottle if you think you’re getting a good deal–and the existence of a $50 bottle makes that seem like a better deal than before. Or, you also might get value out of feeling a little frugal, and without a $50 option, the $15 bottle just seems frivolous–almost twice the expense of a lower cost item. This math doesn’t change, with the $50 inclusion, of course, but when you compare the costs to the most possible, which your mind might be doing, the difference ([15-8]/50 = 14%) just feels a lot smaller.

I’m thinking about this now because of a debate my friend and sometimes collaborator John Bodin and I had on Facebook relative to the health care situation and ObamaCare and all that.

I’m not going to pretend I know what we should actually do regarding the program. I have opinions, sure. But spouting my opinion here is not overly helpful. I don’t, for example, think that anyone has ever changed how they are going to vote by reading my blog or anyone else…so why waste my breath.

But I’m wondering if maybe I can get you to rethink about how important you think this thing might be.

After all, most of the time the American public doesn’t even really think health care is that important of an issue. It’s like the $15 bottle of wine in that case. What do I mean?

Here’s a Gallup poll that tracks how often Americans list Health Care as the top priority facing the country.

Here’s the graph:

So on average over the past twenty years, that number is about 6% (just eyeballing it), unless the current round of politicians has stirred up interest in it. The 1993 spike was focused on the Clinton effort. The 2010 spike is the ObamaCare moment. Otherwise Health Care is the $15 bottle of wine the very few people really care to buy.

And so, the questions I’m asking myself now are: Why all the passion now? What value are people getting out of the argument when it seems that it would be more efficient to spend their time on things that mattered to them?

Is it that there is some inherent value humans get out of the act of arguing? That we do not really want to be one whole? That we do not truly respect diversity of opinion? Is it that, on the whole we have a need to compete? That we want to win, and that we know in our hearts that if we are to win, we must be matched with someone who must therefore lose? Do we argue about things we don’t really care about and take dramatic stands on them specifically because it feeds our ability to feel separate and superior?

I don’t know.

But as a writer, I’m trying to think about these things. And as a person who works in a field where understanding how human beings think about and react to their surroundings is the difference between success and failure, I find the subject both fascinating and of the utmost importance.

If all of that is true, I ask, how do we find the balance?

How do we win?

And, in the end, who is “we?”

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