All too often, I, like all too many Americans, will walk into a fast food joint. As is well known, the fast food industry has, for a good number of years now, been pushing combination meals — a single order will purchase a main course (classically, burger), a side order (fries) and a drink (coke).
Adding a data point:I bought a combo meal at Burger King today. The receipt had the combo meal discount printed on it ($0.85). I submit that normal market forces can bring information to consumers who have difficulty remembering to add three numbers.
(The combo meal discount was static, no matter what size of combo you order. That is, you could increase the fries and soda by one size for $0.50 or two for $1.00. The non-combo cost of a large fry+large soda is $0.50 more than the medium, and the king-sized (or whatever they call it) is another $0.50. I did not test whether I could increase the size of the fries without increasing the size of the soda and still get the combo discount. Based on the receipt, that seems possible.)
@ConstantThanks for the clean reply! I pointed out your analogy as flawed given that fast food items and newspapers are simply not similar in any but the most superficial way. Especially as you had exploited that small similarity to build an argument around the clear irrationality of dismantling newspapers or of selling food by ingredient, insinuating that doing so would be nonsensical and that one must follow from the other: that the suggestion regarding oversight of product bundling was silly because you wouldn't do that to a newspaper/where would it stop, and that it would end badly.
Unfortunately, this is simply a logical slippery slope and thus fallacious rationality.
As mentioned before, there is an understood and clear difference between passing yourself off as someone you aren't in order to spy on and emotionally manipulate/injure someone by exploiting the foibles of human nature to alter their judgement and response (for example, the Megan Meiers case), and your wife using the same to make you feel like an ass for giving weird Uncle Henry the cold shoulder at the family get together. I bring up this seemingly unconnected idea because the type of counterargument you chose in making the above counter would be akin to arguing that "you can't legislate manipulation because then either all cons are just fine or all social manipulation is wrong".
Your argument itself is a fallacy, as your argument is "either X or Y" -- a black and white claim -- when there is clearly a significant gray area involving acceptable and unacceptable manipulation, and rational and irrational ways to deal with such, including legislation that makes some forms of the behavior illegal while not creating a ridiculous police-state situation.
Similarly, arguing that newspapers need to be dismantled into sections or stories because fast food bundles utilize some well-understood presentation tricks to get you to purchase without consideration and that behavior might be corrected, as an argument, is missing both this sort of perspective and scale.
So newspapers and fast food is apples and oranges: one obvious difference being that newspapers aren't trying to get you to "buy more" instead, or relying on presentational grouping or social-linguistic cues to influence your perception of what it is you are buying and the value of such (ie: suggesting the items are a "meal" and presenting them as such to increase profit via suggestion of the nature of what is being purchased, when a burger alone could be a "meal", and given the detrimental nature of both the consumerism the "meal" inspires and the impact on the physical health of a society caused by such).
Paul goes into most of this and more in his own response, so I won't reiterate.
The point was: the analogy upon which your argument rests was false, which did not necessarily invalidate your points as such, but the false dilemma you proposed in the argument stemming from that analogy did.
Paul, are you contributing to the trend some commenters suspect of posts that undermine themselves intentionally to see if people catch them? That comment seems to grant the libertarian objections.
Setting aside that you have declared a Happy Meal to be a market failure, setting aside that you say you regularly and intentionally buy something you consider "an inherently harmful product," we have two items in that next-to-last paragraph.
First, you speak of the fast food industry as something that needs defense. They are offering to sell people hamburgers and tacos. If the practice of selling commonly consumed foods is something that must be defended, you are postulating a society far more authoritarian than your libertarian critics.
Second, it is difficult for consumers to decline to purchase bundles? How seriously do you want us to take that statement? It seems to be the heart of the argument, and the more clearly it is phrased, the more it seems that you must be making either a trivial argument at the margin or a ridiculous argument in general. Either the effect is very small, as it would seem to be if the act of adding three numbers defeats it, or your audience is filled with people who daily commit Herculean acts of willpower. I regularly make unbundled food purchases, even when the bundle is encouraged. I can even overeat without a bundle-based nudging.
You have begun arguments with the following contentions: fast food is inherently harmful; you regularly buy fast food; you know the marketing of bundles and the science of mindless eating; you regularly buy combo meals; you have made dozens if not hundreds of purchases without it striking you to see if that was your lowest-cost option, worth it, or even wanted. Why would we then trust your judgment about policy proposals in this arena?
"I fell for this kind of stupidity even though I know the research. Do you?"
And I think I know why. I was poor enough at one point to have actually gone through the math. Most likely for you, the $1 difference isn't a big deal.
But look at all the biases exhibited in your post:
A) That a large number of people really don't want all of the items.
You don't. Where did you get the idea that most people dont? The 'value meal' label isn't even misleading if people typically do want all of the items.
B) That a large number of people are 'fooled' by this.
First it presupposes A). Second you aren't looking at incentives. You are well trained, but was the money involved consequential to you? If not, perhaps you just didn't spend the small amount of time to figure it out.
Constant's analogy, which is convincing on the surface, but ultimately, misleading (and hence intellectually dangerous).
Yup. That's me in a nutshell. I'm also a hidden camera show for Fox News.
I'm in the process of moving, so my follow-up post is going to be delayed, but I feel like I must respond to Constant's analogy, which is convincing on the surface, but ultimately, misleading (and hence intellectually dangerous).
So, a quick list of some reasons why fast food and newspapers are disanalagous is in order.
a) Peoples' consumption (not economic consumption, as in purchase, but actual use) behavior isn't as heavily influenced by newspaper bundling as by food bundling. We might *buy* more newspaper than we really want because it's bundled, but there's no reason to believe we *read* more newspaper than we really want. On the other hand, when we're given a large amount of unhealthy food, we tend to eat it all, whether or not we really want it. This is the well-supported empirical regularity of portion size effects (one of the biases mentioned in the original post). This means that the cost to the consumer of food bundling is steeper than the cost of newspaper bundling, and it's a cost in the form of obesity, heart disease, etc.
b) In one major sense, newspaper content isn't bundled. Most of the cost to the consumer of a newspaper and revenue for the publisher isn't in the (di minimis) price for buying the paper, it's in the reading of advertisements. If I buy a whole paper and only read the sports section, not only do I not consume the other sections, I don't "pay" for that section by having my time and attention wasted on advertisements.
c) Fast food may warrant a law with or without bundling. This is because fast food is an inherently harmful product (that is, it is ok to pick on fast food), at least relative to other, healthier, food options. The point of bundling with fast food is that it makes a bad thing even worse, because it causes people to consume more of the bad thing. Thus, it makes it more likely that a law is justified. By contrast, newspaper bundling does not make a bad thing even worse. Newspapers generally have fewer harmful and more beneficial effects than fast food for everyone except religious fanatics.
That being said, I do think there is some vestigial objectionable quality to bundling in general, to the extent that it does affect consumer choices -- that is, to the extent that consumers will buy bundled items that they wouldn't buy a la carte for the same total price in cases where there are low or zero transaction costs to the consumer for buying the items a la carte. If that's the case then we've eliminated the rational bundle-buying reasons, and what's going on is consumer irrationality, being exploited. Surely this is a bad thing.
In some cases, as in the newspaper case, bundling is defensible because non-bundled items are probably not economically viable because, e.g., of economies of scale in production, etc., and hence the consumer couldn't get the items were they not bundled. That, I think, is another place Constant goes wrong: the availability of individual items does indirectly make bundling worse, because it proves that individual items are economically viable, and thus eliminates one of the justifications for bundling in general.
More generally, I think bundling in general is defensible because it just isn't that costly to consumers, and, if it is costly in particular cases, we can rely on the market to supply non-bundled alternatives where possible. But I'd suggest that the health costs of fast food, plus the biases (noted in the original post) that make it difficult for consumers to respond appropriately to those costs by declining to purchase bundles (and hence permit market failures), make that defense unavailable to the fast food industry.
This comment came out a lot longer than intended, but I hope it answers at least some of the libertarian objections.
Constant: I find your comment to be *very* insightful. It displays the analytic thinking process that I am trying to sharpen. Thanks.
However, if you would please rephrase your concerns as a question in the context my critique (of the appropriateness of your analogy) was made, I would be happy to respond cogently to your concerns
You raised an objection to my analogy. Your objection was that in the case of fast food the customer is offered a choice between bundle and individual items, but in the case of the newspaper the customer is not offered a choice between bundle and individual items. This supposed defect can be easily corrected if McDonald's and Burger King cease offering individual items and sell only bundles. Now, instead of having the choice between individual items and slightly discounted bundles, customers have no choice.
Surely this would be strictly worse. Thus:
Current state of fast food is superior to fast food without individual items, so if the current state warrants a law, then fast food without individual items would warrant a law all the more (possibly a law which forces restaurants to sell individual items).
Fast food without individual items is analogous to newspaper, which sells only bundles of sections, not all of which people want. If fast food without individual items would warrant a law, then by the same token newspaper would warrant a law (possibly a law which forces papers to sell individual sections).
My point is quite simple: Paul (and others here) have picked on fast food, pointed out something about fast food, a supposed defect, which defect is reproduced all throughout the economy. The dis-analogy you point out is actually an exacerbation of the problem, so if there is a problem with fast food restaurants then there is all the more a problem with newspapers.
My best explanation for this special treatment of fast food as defective when the supposed defects in fact exist throughout the economy is that it is cool to spit on fast food, just as it is cool to spit on Walmart.
I'm not going to get into the political discussion, except to note that in J-morality (you all are following Eliezer, right?) attempts to protect people from themselves are ipso facto wrong.
Isn't it OK if you teach them how to protect themselves, at a price they're willing to pay?
The large majority of people I meet in person or online who self-describe as libertarians are unpleasant and doctrinaire. And -- try this -- when you meet somebody who says he's a libertarian, sometime later ask him whether he's angry at his father. Do it 30 or 40 times and keep track of the numbers. But all that aside, they can still be right sometimes.
If people sufer consistent biases, how can we possibly keep other people from taking advantage of those biases? Companies tend to evolve marketing strategies, they look at what works better and then improve on it. They increase their bias in favor of techniques that bring in money. I'm guessing that often none of the individuals involved understand the biases they're exploiting, they're just stumbling onto things.
How can you possibly make laws against it that they can understand?
Far better to teach the victims to be less biased, than to try to protect them from their biases. The nonhuman world is likely to use their biases to hurt them, whenever they stray from the environments where the biases work in their favor.
Greetings, constant. I don't understand this desire in the comments section of a discussion blog about rationality and bias to take something someone says, twist it in all sorts of bizarre ways and chop pieces out, then point at the hideous mutation that results and scream: "Lookit what he said! It's sooooo silly! That's totally crazy!! Hahaha! I can't believe you said that!!?! Are you serious?!?!"
Nor including all sorts of eye-gouging and unnecessary punctuation marks and queries indicating emotionality, and appealing to nothing more than the monkey-social aspects of an argument to 'win' via supposed mockery and humiliation of some silly non-point that was never made, except in the virtual cutting room.
Is OB suddenly a new 'hidden camera' show for Fox News?
However, if you would please rephrase your concerns as a question in the context my critique (of the appropriateness of your analogy) was made, I would be happy to respond cogently to your concerns. Otherwise, I'm afraid I can't provide any meaningful answers to questions based on inaccurate representations of my position, positions I haven't even taken, loaded questions, or bemused hysteria.
Grant, from reading your post, it seems to me that you think it may be true that sometimes coercive approaches, including coercive governmental approaches, yield better results than free market approaches. That's not reflexive libertarianism, and I think if you fairly read the comments in the economic academic blogosphere, you'll find commenters that will make no such concession.
Even still, you seem in my reading to signal that your libertarianism vs. coercivism isn't strictly limited by empiricism/consequentialism, but rather serves as a belief as cheer/team belief, too. You seem to me to be less interested in empirical exploration of what gives the best results then in being one of the folks who argues for less coercion in a dialectic.
You're not alone in that, and it's an interesting phenomenon to me. I don't have a handle on why raw empiricism/consequentialism isn't more salient to folks like you.
But feel free to enlighten me if you think I'm wrong in any of my analysis about this.
You're not able to order your newspaper to order. If you could, the analogy would be more valid.
1) So you're saying that if the customer is not given the option to buy the individual items, then that's better than if he is given the option. You're serious??!! So if we go from a situation in which two options are offered, one of them (by Paul's assumption) inferior to the other, then if we change this situation so that only the inferior option is offered, then this is an improvement? Really??!!
2) Sellers often offer both individual items and bundles. You can buy a six-pack or individual cans. You can buy a toolkit or individual tools. You can buy a fruit basket or you can buy individual fruits. And so on. So substitute any of these real examples, which you acknowledge to be "more valid". Is offering bundles at a slight discount bad? Really??!!
I'm not certain if you are deliberately mischaracterizing my point, or simply had not thought through the response: this has little to do with money by itself, as one could see the same argument made with the intent to manipulate people for other resources (for political power), emotionally (via bullying or to obtain sex), or intellectually (as with Creationism).
Rationally, we must both agree that there is a level of normal social manipulation that occurs in regular human interactions, and must also agree that when con-men utilize the same they can hardly be considered comparable or of the same type in intent and outcome.
Otherwise, if I sell you a bridge I do not own, you should not be allowed to arrest me on the basis that I "misled" you if we are to treat such manipulations the same as those occurring in normal interactions, but as we do not expect these manipulations to benefit you while inconveniencing us, or rather, that you are not using the manipulations to deliberately deceive or mislead us. Therein lies the difference.
This is also where constant's argument about newspapers falls down: there's no trickery involved in getting things you don't want with the newspaper or manipulations making you purchase a more expensive newspaper stuffed full of confetti over a less expensive one that doesn't include confetti, while being told its cheaper (overall) to buy the confetti-filled newspaper, because, hey, confetti's expensive. You're not able to order your newspaper to order. If you could, the analogy would be more valid.
Do you always use deliberate oversimplifications to misrepresent others' arguments and finish it up with ad homs in your responses? Oh wait...
See above for a response to your logical but nonsensical retort, or the short version:"He deliberately misled me!""Did he put a gun to your head?""No.""Then you made the decision of your own free will?""I guess so.""Then it's your fault.""WTF?!"
PSperhaps if they had a diet combo and charged the same amount for the combo with water and a salad instead of soda and fries.
1. It is easier to order the combo.2. Water signals cheapness.
Order the combo and throw away what you do not want.
I'm wondering what libertarian myth HA is referring to? With the possible exception of some rabid Rothbardians, I don't know any libertarians who reflexively assert that all coercive interventions are necessarily bad. Most just think they tend to produce bad results. I personally believe that any group which has coercive power over another group will not tend to act in its best interest, and that using government to correct bias is problematic because the incentives (or even the ability) to accurately define what is rational just don't seem to exist (as they do with individuals, who are rewarded for rational behavior).
Toss the knowledge problem into the mix, and you can easily see why someone would always prefer peaceful solutions. I'm not a bias expert or a fast food expert; I can't know what the best solution to the Happy Meal Problem is. So I "reflexively" trust my heuristic instead, and believe that the coercive solution is probably not going to turn out well. Does this sound irrational?