Thursday, February 10, 2005

Educated Fools

There's a constant, wearisome debate in our media over hybrid cars and organic food. Do they really do what they're supposed to do? Will customers really pay more for their alleged benefits? The framing of these arguments usually involves a heroic effort to ignore obvious facts about both markets, which I'll address in turn.

First, hybrids. In November of 2003, we were informed that hybrid cars have no mainstream appeal. But in June of 2004, demand was so high that dealers simply couldn't keep hybrids in stock.

In December of 2004, Honda said that it expects hybrid sales to double in 2005. But on January 12 of 2005, we learned that hybrids face a bleak future:

For hybrid vehicles at this year's North American International Auto Show, the "wow" factor is over....Since 2000, U.S. hybrid sales have grown at an average annual rate of 88.6 percent, according to Michigan-based R.L. Polk & Co. But to keep posting those kinds of gains, automakers will have to keep improving hybrid engines and keep hybrid prices down. Hybrids currently cost around $3,000 to $4,000 more than regular gas versions.
Pardon my recourse to vulgarity, but can you believe this bullshit? A product with an average annual growth rate of 88.6 percent is doing just fine; most manufacturers would be ecstatic to see demand grow at a quarter of that rate. And the need to keep improving engines isn't some crisis that heralds the hybrid's doom; on the contrary, the need for constant improvement (or the appearance of improvement) is a basic fact of life in the automotive industry. As to the last comment, here's a really revolutionary idea: if you're saving money on gas, you can factor the total amount you'll save annually into the cost of the car.

Still, the debate rages on. Hybrid vehicle sales doubled in 2004, sure, but they might reach a plateau by 2010! On second thought, they will reach a plateau by 2010, if not before! (These are two different articles about the same which came from the same firm who said in November of 2003 that hybrids had no mainstream appeal.)

Then again, maybe hybrids do have mainstream appeal! Or maybe not!

Here's the problem, as I see it. Commentators, for the most part, are thinking of hybrids as gas-saving vehicles. Consequently, they tend to predict sales based on how consumers are feeling about gas prices, and how well hybrid technology meets the public desire for fuel efficiency. But the Prius, for instance, also represents a fairly radical change in design; it has attractive features that have nothing to do with fuel efficiency, and these features also drive sales. The appeal of a product like the Prius is the sum total of all its real and perceived benefits; if you concentrate on the single feature of the hybrid engine, you miss the point. You don't recognize that some consumers will say "I love the way this car looks, I love the way it feels...and it gets better mileage!"

Regardless of the future of hybrids (or whether they're actually "green" in any meaningful sense), the companies that first made them are making good marketing decisions and good design decisions, and that's very likely to keep them ahead of the curve in years to come. To reduce all these complex marketing issues to some kneejerk neoclassical trade-off between price and fuel efficiency is just silly.

You'd think that by now, we would've completely given up the idea that people reliably make buying decisions based on price. That was supposed to be the reason organic farming was doomed to ignominious failure, remember? Well, it turns out it wasn't a failure at all...but that's apparently because people are so goddamn stupid and irrational:
Ten years ago, Wegmans threw away much of its organic produce, but not anymore. The stores' overall sales have jumped 70 percent since last year. Wegmans has responded by increasing organic offerings, especially at its upscale stores.

Wegmans' nutritionist Jane Andrews said that people are buying based on feelings and not necessarily fact. "Customers want to believe that it's better for them, that it's safer, that it's more nutritious. I can't say that, because there is no proof," she said.
Maybe not. But there's ample proof that the processes inherent in conventional agribusiness are socially harmful, whether its food products are safe or not; the idea that an increasing number of consumers recognize this, and are making moral decisions based on it, has apparently never occurred to most experts (though one scientist quoted in the article above concedes that organic farming "does have a bit of an advantage, because it may be more environmentally friendly").

Experts have repeatedly failed to recognize the potential of products of this type, largely because they labor under a narrow, reductive view of what drives buying decisions. The notion that some consumers have an honest, altruistic motive for buying a given product (whether that motive is realistic or not) simply doesn't come naturally to them, no matter how many times they hear people say they're doing just that. Nor does the idea that some people avoid certain food products out of sincere moral horror. I've been longing to introduce another cumbersome, pretentious phrase into the lexicon of cultural theory, so I'll call this phenomenon "apotropaic consumption": buying intended to ward off evil. Remember, you heard it here first!

In terms of organic food, some of the more highbrow commentators do invoke the spectre of conspicuous consumption, especially as regards what Veblen called "the ceremonial differentiation of the dietary." But again, this is overly reductive. Neither "rational self-interest," nor conspicuous consumption, nor irrational fads, nor the three combined, can sufficiently explain current consumer trends. As long as experts fail to recognize this, they'll keep making fools of themselves with the sort of articles I've quoted here.


JMS said...

Interesting points. My friend rented all the electric cars and we drove 'em around - for city driving, nothing beats sitting a stoplight with the engine turned off - hit the gas and it purrs (not roars) to life. It also looks like car companies are dumping a lot of truely new design ideas for dash layout and so on into these cars, probably to take advantage of what they thought was a built in market.

On organic - I think one thing I have seen recently that is very irritating is marketing is starting to take advantage of the "organic" label for things that are not neccesarily organic.

Phila said...

I think you're right about the design-dumping, MG. My wife and I sat in a Prius that was on display at a green expo, and we had this absolutely elemental feeling of greed. It wasn't about the was the overall look and feel of the car, the way the dash was laid out, and all the interesting controls. It instantly inspired pure techno-geek lust, and I'm sure I'm not the only one who feels that way.

Intellectually, of course, I have problems with hybrids, with the Prius, with Toyota, with you-name-it. But still, I'm an American living in a huge, fascinating state, and I can't help loving cars and's in my blood, along with a couple pounds of lead from the pre-catalytic converter era.

Anonymous said...

"apotropaic consumption" I know I've been doing more of it lately. Since our efforts to make big changes happen are not going so great, you can make yourself feel better by making these small choices.

Thers said...

You get to one of the big problems I've always had with economics, at least insofar as its intersected with my own oddball studies: that is, its impoverished conception of agency. I have a professional interest in authors who write books who knew perfectly freaking well that they would probably never find a publisher and that even if they did, their books would be banned. From the perspective of "rational economics," James Joyce was the biggest idiot ever, someone who spent his most productive years working at a project for which there was no reasonable prospect of renumeration...

The fact is that the economic market is NOT the only market in existence. There are many spheres of human existence which operate according to rules that are sometimes the precise opposites of those in the dominant economic field.

In a nutshell, the people you are criticizing in this post are guilty of the first intellectual sin, that of assuming that you already understand the rules of the phenomenon you are trying to describe. Description beats prescription nine times out of ten, but nobody wants to admit it... there's no market for it!

Aquaria said...

authors who write books who knew perfectly freaking well that they would probably never find a publisher

Hey! I resemble that remark!

Anyway, I agree that people miss ALL of the decisions consumers make when we buy a product. Especially cars. If all we wanted from a car was something to take us from point A to point B, we wouldn't have so many different types of vehicles to choose from. Cars have become as much of personal statements as the clothes we wear. That's just the way it is.

As for organic food, maybe some of us really do buy it because we don't want to ingest all those pesticides and other chemicals used in agribusiness. I swear, the organic produce at my local market looks and tastes better than the mass-produced crap. Coupled with the lack of nasty Monsanto chemicals, that makes organic worth the few extra cents a pound or bunch or whatever.

Phila said...

LJ, I completely agree about organic/local produce tasting better. (Apples, especially!) And that's another factor that these people simply don't want to always comes down to "Is it really healthier?"

But even if conventional produce were equal to organic in healthiness and quality, lots of people would still buy organic, as a protest against the predations of agribusiness. And I think that as our ability to participate in government declines, such buying decisions start to seem more compelling to people.

robin andrea said...

there are more than enough people in port townsend wa to support a nice coop that sells organic food. much of it grown locally. many of the people i speak to cite the bad effects of agrabiz production. our last home in santa cruz ca is a hotbed of organic food and the politics of it is prominent.

dread pirate roberts

robin andrea said...

there are more than enough people in port townsend wa to support a nice coop that sells organic food. much of it grown locally. many of the people i speak to cite the bad effects of agrabiz production. our last home in santa cruz ca is a hotbed of organic food and the politics of it is prominent.

dread pirate roberts

Aquaria said...

And, again, Phila, this comes back to my statement about how more than mere factoids drive our decisions when we're spending money. How we spend our money, at least in this society, this culture, has come to mean an expression of who you are. We are making statements about what we think and believe, every time we agree to hand over money for any product.