organic

Why do so many people equate “natural” with “good”?

pnrj ethics, market failure , , , , , , , ,

Dec 3, JDN 2458091

Try searching sometime for “all-natural” products. It doesn’t matter whether you’re looking for dog food, skin cream, clothing, or even furniture polish; you will find some out there that proudly declare themselves “all-natural”. There is a clear sense that there is something good about being natural, some kind of purity that comes from being unsullied by industrial technology. (Of course, when you buy something online that is shipped to you in a box carried on a truck because it’s “all-natural”….)

Food is the most extreme case, where it is by now almost universally agreed that processed food is inherently harmful and the source of all of our dietary problems if not all our social ills.

This is a very strange state of affairs, as there is no particular reason for “natural” and “good” to be in any way related.

First of all, I can clearly come up with examples of all four possible cases: Motherhood is natural and good, but gamma ray bursts are natural and bad. Vaccination is artificial and good, but nuclear weapons are artificial and bad.

Natural Artificial
Good Motherhood Vaccination
Bad Gamma ray bursts Nuclear weapons

But even more than that, it’s difficult to even find a correlation between being natural and being good. If anything, I would expect the correlation to run the other way: Artificial things were created by humans to serve some human purpose, while natural things are simply whatever happens to exist. Most of the harmful artificial things are the result of mistakes, or unintended consequences of otherwise beneficial things—while plenty of harmful natural things are simply inherently harmful and never benefited anyone in any way. Nuclear weapons helped end World War 2. Gamma ray bursts will either hardly affect us at all, or instantly and completely annihilate our entire civilization. I guess they might also lead to some valuable discoveries in astrophysics, but if I were asked to fund a research project with the same risk-reward profile as a gamma ray burst, I would tear up the application and make sure no one else ever saw it again. The kind of irrational panic people had about the possibility of LHC black holes would be a rational panic if applied to a research project with some risk of causing gamma ray bursts.

The current obsession with “natural” products (which is really an oxymoron, if you think about it; it can’t be natural if it’s a product) seems to have arisen as its own unintended consequence of something good, namely the environmentalist movement in the 1960s and 1970s. The very real problems of pollution, natural resource depletion, extinction, global warming, desertification, and ocean acidification led people to rightly ask how the very same industrial processes that brought us our high standard of living could ultimately destroy it if we left them unchecked.

But the best solutions to these problems are themselves artificial: Solar power, nuclear energy, carbon taxes. Trying to go back to some ancient way of life where we didn’t destroy the environment is simply not a viable option at this point; even if such a way of life once existed, there’s no way it could sustain our current population, much less our current standard of living. And given the strong correlation between human migrations and extinction events of large mammals, I’m not convinced that such a way of life ever existed.

So-called “processed food” is really just industrially processed food—which is to say, food processed by the most efficient and productive technologies available. Humans have been processing food for thousands of years, and with very good reason; much of what we eat would be toxic if it weren’t threshed or boiled or fermented. The fact that there are people who complain about “processed food” but eat tofu and cheese is truly quite remarkable—think for a moment about how little resemblance Cheddar bears to the cow from whence it came, or what ingenuity it must have taken people in ancient China to go all the way from soybean to silken tofu. Similarly, anyone who is frightened by “genetically modified organisms” should give some serious thought to what is involved in creating their seedless bananas.

There may be some kernel of truth in the opposition to industrially processed food, however. The problem is not that we process food, nor that we do so by industrial machines. The problem is who processes the food, and why.

Humans have been processing food for thousands of years, yes; but only for the last few hundred have corporations been doing that processing. For most of human history, you processed food to feed your family, or your village, or perhaps to trade with a few neighboring villages or sell to the nearest city. What makes tofu different from, say, Fruit Loops isn’t that the former is less processed; it’s that the latter was designed and manufactured for profit.

Don’t get me wrong; corporations have made many valuable contributions to our society, including our food production, and it is largely their doing that food is now so cheap and plentiful that we could easily feed the entire world’s population. It’s just that, well, it’s also largely their doing that we don’t feed the entire world’s population, because they see no profit in doing so.

The incentives that a peasant village faces in producing its food are pretty well optimized for making the most nutritious food available with the least cost in labor and resources. When your own children and those of your friends and neighbors are going to be eating what you make, you work pretty hard to make sure that the food you make is good for them. And you don’t want to pollute the surrounding water or destroy the forest, because your village depends upon those things too.

The incentives that a corporation faces in producing food are wildly different. Nobody you know is going to be eating this stuff, most likely, and certainly not as their primary diet. You aren’t concerned about nutrition unless you think your customers are; more likely, you expect them to care about taste, so you optimize your designs to make things taste as good as possible regardless of their nutrition. You care about minimizing labor inputs only insofar as they cost you wages—from your perspective, cutting wages is as good as actually saving labor. You want to conserve only the resources that are expensive; resources that are cheap, like water and (with subsidies) corn syrup, you may as well use as much as you like. And above all, you couldn’t care less about the environmental damage you’re causing by your production, because those costs will be borne entirely by someone else, most likely the government or the citizens of whatever country you’re producing in.

Responsible consumers could reduce these effects, but only somewhat, because there is a fundamental asymmetry of information. The corporation “knows” (in that each of the administrators in each of the components that needs to know, knows) what production processes they are using and what subcontractors they are hiring, and could easily figure out how much they are exploiting workers and damaging the environment; but the consumers who care about these things can find out that information with great difficulty, if at all. Consumers who want to be responsible, but don’t have very good information, create incentives for so-called “greenwashing”: Corporations have many good profit-making reasons to say they are environmentally responsible, but far fewer reasons to actually be environmentally responsible.

And that is why you should be skeptical of “all-natural” products, especially if you are skeptical of the role of corporations in our society and our food system. “All-natural” is an adjective that has no legal meaning. The word “organic” can have a legally-defined meaning, if coupled with a certification like the USDA Organic standard. The word “non-toxic” has a legally-defined meaning—there is a long list of toxic compounds it can’t contain in more than trace amounts. There are now certifications for “carbon-neutral”. But “all-natural” offers no such protection. Basically anything can call itself “all-natural”, and if corporations expect you to be willing to pay more for such products, they have no reason not to slap it on everything. This is a problem that I think can only be solved by stringent regulation. Consumer pressure can’t work if there is no transparency in the production chain.

Even taken as something like its common meaning, “not synthetic or artificial”, there’s no reason to think that simply because something is natural, that means it is better, or even more ecologically sustainable. The ecological benefits of ancient methods of production come from the incentives of small-scale local production, not from something inherently more destructive about high-tech industry. (Indeed, water pollution was considerably worse from Medieval peasant villages—especially on a per-capita basis—than it is from modern water treatment systems.)

“But wait, there’s more!”: The clever tricks of commercials

pnrj cognitive science, heuristics and biases, market failure , , , , , , , , , , , , , , , ,

JDN 2457565

I’m sure you’ve all seen commercials like this dozens of times:

A person is shown (usually in black-and-white) trying to use an ordinary consumer product, and failing miserably. Often their failure can only be attributed to the most abject incompetence, but the narrator will explain otherwise: “Old product is so hard to use. Who can handle [basic household activity] and [simple instructions]?”

“Struggle no more!” he says (it’s almost always a masculine narrator), and the video turns to full color as the same person is shown using the new consumer product effortlessly. “With innovative high-tech new product, you can do [basic household activity] with ease in no time!”

“Best of all, new product, a $400 value, can be yours for just five easy payments of $19.95. That’s five easy payments of $19.95!”

And then, here it comes: “But wait. There’s more! Order within the next 15 minutes and you will get two new products, for the same low price. That’s $800 in value for just five easy payments of $19.95! And best of all, your satisfaction is guaranteed! If you don’t like new product, return it within 30 days for your money back!” (A much quieter, faster voice says: “Just pay shipping and handling.”)

Call 555-1234. That’s 555-1234.

“CALL NOW!”

Did you ever stop and think about why so many commercials follow this same precise format?

In short, because it works. Indeed, it works a good deal better than simply presenting the product’s actual upsides and downsides and reporting a sensible market price—even if that sensible market price is lower than the “five easy payments of $19.95”.

We owe this style of marketing to one Ron Popeil; Ron Popeil was a prolific inventor, but none of his inventions have had so much impact as the market methods he used to sell them.

Let’s go through step by step. Why is the person using the old product so incompetent? Surely they could sell their product without implying that we don’t know how to do basic household activities like boiling pasta and cutting vegetables?

Well, first of all, many of these products do nothing but automate such simple household activities (like the famous Veg-O-Matic which cuts vegetables and “It slices! It dices!”), so if they couldn’t at least suggest that this is a lot of work they’re saving us, we’d have no reason to want their product.

But there’s another reason as well: Watching someone else fumble with basic household appliances is funny, as any fan of the 1950s classic I Love Lucy would attest (in fact, it may not be a coincidence that the one fumbling with the vegetables is often a woman who looks a lot like Lucy), and meta-analysis of humor in advertising has shown that it draws attention and triggers positive feelings.

Why use black-and-white for the first part? The switch to color enhances the feeling of contrast, and the color video is more appealing. You wouldn’t consciously say “Wow, that slicer changed the tomatoes from an ugly grey to a vibrant red!” but your subconscious mind is still registering that association.

Then they will hit you with appealing but meaningless buzzwords. For technology it will be things like “innovative”, “ground-breaking”, “high-tech” and “state-of-the-art”, while for foods and nutritional supplements it will be things like “all-natural”, “organic”, “no chemicals”, and “just like homemade”. It will generally be either so vague as to be unverifiable (what constitutes “innovative”?), utterly tautological (all carbon-based substances are “organic” and this term is not regulated), or transparently false but nonetheless not specific enough to get them in trouble (“just like homemade” literally can’t be true if you’re buying it from a TV ad). These give you positive associations without forcing the company to commit to making a claim they could actually be sued for breaking. It’s the same principle as the Applause Lights that politicians bring to every speech: “Three cheers for moms!” “A delicious slice of homemade apple pie!” “God Bless America!”

Occasionally you’ll also hear buzzwords that do have some meaning, but often not nearly as strong as people imagine: “Patent pending” means that they applied for the patent and it wasn’t summarily rejected—but not that they’ll end up getting it approved. “Certified organic” means that the USDA signed off on the farming standards, which is better than nothing but leaves a lot of wiggle room for animal abuse and irresponsible environmental practices.

And then we get to the price. They’ll quote some ludicrous figure for its “value”, which may be a price that no one has ever actually paid for a product of this kind, then draw a line through it and replace it with the actual price, which will be far lower.

Indeed, not just lower: The actual price is almost always $19.99 or $19.95. If the product is too expensive to make for them to sell it at $19.95, they will sell it at several payments of $19.95, and emphasize that these are “easy” payments, as though the difficulty of writing the check were a major factor in people’s purchasing decisions. (That actually is a legitimate concern for micropayments, but not for buying kitchen appliances!) They’ll repeat the price because repetition improves memory and also makes statements more persuasive.

This is what we call psychological pricing, and it’s one of those enormous market distortions that once you realize it’s there, you see it everywhere and start to wonder how our whole market system hasn’t collapsed on itself from the sheer weight of our overwhelming irrationality. The price of a product sold on TV will almost always be just slightly less than $20.

In general, most prices will take the form of $X.95 or $X.99; Costco even has a code system they use in the least significant digit. Continuous substances like gasoline can even be sold at fractional pennies, and so they’ll usually be at $X.X99, being not even one penny less. It really does seem to work; despite being an eminently trivial difference from the round number, and typically rounded up from what it actually should have been, it just feels like less to see $19.95 rather than $20.00.

Moreover, I have less data to support this particular hypothesis, but I think that $20 in particular is a very specific number, because $19.95 pops up so very, very often. I think most Americans have what we might call a “Jackson heuristic”, which is as follows: If something costs less than a Jackson (a $20 bill, though hopefully they’ll put Harriet Tubman on soon, so “Tubman heuristic”), you’re allowed to buy it on impulse without thinking too hard about whether it’s worth it. But if it costs more than a Jackson, you need to stop and think about it, weigh the alternatives before you come to a decision. Since these TV ads are almost always aiming for the thoughtless impulse buy, they try to scrape in just under the Jackson heuristic.

Of course, inflation will change the precise figure over time; in the 1980s it was probably a Hamilton heuristic, in the 1970s a Lincoln heuristic, in the 1940s a Washington heuristic. Soon enough it will be a Grant heuristic and then a Benjamin heuristic. In fact it’s probably something like “The closest commonly-used cash denomination to half a milliQALY”, but nobody does that calculation consciously; the estimate is made automatically without thinking. This in turn is probably figured because you could literally do that once a day every single day for only about 20% of your total income, and if you hold it to once a week you’re under 3% of your income. So if you follow the Jackson heuristic on impulse buys every week or so, your impulse spending is a “statistically insignificant” proportion of your income. (Why do we use that anyway? And suddenly we realize: The 95% confidence level is itself nothing more than a heuristic.)

Then they take advantage of our difficulty in discounting time rationally, by spreading it into payments; “five easy payments of $19.95” sounds a lot more affordable than “$100”, but they are in fact basically the same. (You save $0.25 by the payment plan, maybe as much as a few dollars if your cashflow is very bad and thus you have a high temporal discount rate.)

And then, finally, “But wait. There’s more!” They offer you another of the exact same product, knowing full well you’ll probably have no use for the second one. They’ll multiply their previous arbitrary “value” by 2 to get an even more ludicrous number. Now it sounds like they’re doing you a favor, so you’ll feel obliged to do one back by buying the product. Gifts often have this effect in experiments: People are significantly more motivated to answer a survey if you give them a small gift beforehand, even if they get to keep it without taking the survey.

They’ll tell you to call in the next 15 minutes so that you feel like part of an exclusive club (when in reality you could probably call at any time and get the same deal). This also ensures that you’re staying in impulse-buy mode, since if you wait longer to think, you’ll miss the window!

They will offer a “money-back guarantee” to give you a sense of trust in the product, and this would be a rational response, except for that little disclaimer: “Just pay shipping and handling.” For many products, especially nutritional supplements (which cost basically nothing to make), the “handling” fee is high enough that they don’t lose much money, if any, even if you immediately send it back for a refund. Besides, they know that hardly anyone actually bothers to return products. Retailers are currently in a panic about “skyrocketing” rates of product returns that are still under 10%.

Then, they’ll repeat their phone number, followed by a remarkably brazen direct command: “Call now!” Personally I tend to bristle at direct commands, even from legitimate authorities; but apparently I’m unusual in that respect, and most people will in fact obey direct commands from random strangers as long as they aren’t too demanding. A famous demonstration of this you could try yourself if you’re feeling like a prankster is to walk into a room, point at someone, and say “You! Stand up!” They probably will. There’s a whole literature in social psychology about what makes people comply with commands of this sort.

And all, to make you buy a useless gadget you’ll try to use once and then leave in a cupboard somewhere. What untold billions of dollars in wealth are wasted this way?