A Chocolate Gift

In the post yesterday I received a welcome surprise... a thank you note from the sailing summer camp I am a leader on complete with a chocolate bar!

I was touched, and as I was rather peckish at the time I tucked straight into the chocolate. That got me thinking. Why did I value the chocolate bar so much? If the thank you note had included the cash value of the bar I would have been rather puzzled (it's just not the done thing) and maybe even insulted. I certainly would not have felt as appreciated as I did as I devoured the Milky Way.

Tons of research has shown that material gifts are appreciated more than the cash. This is strange; cash gives us more flexibility. A recent paper by Kube, Marechal and Puppe (2011) concludes that it really is the thought that counts. The more thought that has gone into a gift, the more we appreciate it, almost regardless of how useful the gift is to us.

So there we go; if anyone feels like thanking me in the near future... send a chocolate bar...

Salt And Oats - Fire Coming Out Of The Monkey's Head

Sailing on the Norfolk Broads is both a wonderful and totally unique experience. We cruise around beautiful rivers and lakes in 1930s yachts, enjoying getting away from the world. Every now and then, however, we have to stop at outposts of civilisation for supplies. Ludham Bridge Stores is one such outpost. It is almost the dictionary definition of a monopoly; the nearest competitor is at least half a day by sail. So improving their shop using behavioural economics probably isn't a high priority for the owners, but I humbly suggest that they might be able to increase their profitability somewhat...

The first thing you see as you enter the front door is salt and oats. Right in your face. At eye-level. About 50cm from your face.

Now, I'm fairly confident when I say that salt and oats are the exact opposite of 'impulse buys'. No-one ever in the history of humanity has ever walked into a shop, seen some salt, and thought to themselves:

"Oooh... That might nice..."

Why? Because people know whether they need salt or not. They have either run out of salt, in which case they will buy it wherever you put in the shop, or they have not run out of salt, in which case they will not buy it.

It's a fairly similar story with oats.

And, worse than wasting the prime spot in the shop to get people to buy something on an impulse (like, say, an ice-cream) you have, in one fell swoop, changed the consumer journey. They will now be thinking:

"Oh, I don't need salt... What do I need?"

By getting people to think about what they need rather than what they would like, Ludham Bridge Stores probably sells fewer ice-creams and other such-like impulse items.

After saying all this as I stood with friends at the entrance to the shop a few weeks ago, I was told to shut-up, hurry-up and just buy something by my mates. Such is the life of a behavioural economist.

Ludham Bridge

Recommended listening:
Fire Coming Out Of The Monkey's Head by Gorillaz

Sailing Times - I'm A Harrier And I'm Okay

At the start of a week's sailing on the beautiful Norfolk Broads, a question occurred to me... are we rational with regards to time?

I was a leader on Harriers B - a fantastic camp for 15-18s. On the first evening on the cruise, when commanded by the Commodore, we all changed our watches to something called cruise time. Cruise time is an hour later, so at 21:45 all our time-keeping devices were changed to 22:45. The rationale behind it is that as a small fleet of yachts we need to get into moorings early each day while there is still space. So cruise time helps us be earlier. For example, we get up at 7am cruise time and are usually moored up by 5pm cruise time. This sounds a lot better than getting up at 6am every day to be in by 4pm. And because it sounds better it feels better. And because it feels better we do more at that ungodly hour of the morning. Thus cruise time works. It genuinely makes us earlier.

Admittedly there was some protest this year from one of the leaders...

Commy: I'll wake you all up at 7am tomorrow...
Matt: It's 6am!
Commy: No it's not!
Matt: You can't fool my body!

(And in fairness Matt did his very best to prove this was the case throughout the week, never knowingly getting up).

However, most of us swiftly adjusted to cruise time. We were probably better at getting up in the  morning in the mindset of it being 7am than 6am, even though it was all a trick.

According to traditional economics we, as homo economicus, should be unaffected by cruise time. We should behave just the same. It is just a simple trick - the real world time is unaffected. We are not deceived into changing our watches, we all know what we're doing and why we're doing it.

But given that we do change our behaviour when we're told that it's 7am not 6am, even when we know that is not the case, I suggest that this presents a challenge to the belief that we're all the perfectly rational homo economicus.

Recommended listening:
I'm A Harrier And I'm Okay (see verse 5)