Why many products are always “on sale” – and why buyers fall for it

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My wife and I had a running joke going for a while with the Kohl’s circular that would come in the Sunday newspaper: every week was “the biggest sale of the year!” This is a common strategy for many retailers and consumers continue to fall for it:

“People don’t have a gut sense of absolute value. It’s just that they’re sensitive to contrast. So if you say I’m getting 40 percent off, I’m interested, no matter what the actual cost is.”

“The whole concept of a sale or a discount has become really perverted,” said Shell, a co-director of Boston University’s Center for Science & Medical Journalism and a contributing editor to Atlantic Monthly. “So what is the price? We think of price as a number, something that’s coolly objective, but it’s not. It’s a highly emotional construct. Price is manipulated to attract the consumer.

“If people see a sweater on a table for $50, they don’t buy it. If they see the same sweater was once $100, they will. We’re highly swayed by reference price. … There are some things that are almost perennially on sale, like mattresses and jewelry. We buy almost all our clothing on sale.”

“Retailers are now outfoxing consumers,” said Kit Yarrow, chair of the psychology department at Golden Gate University, where she is a jointly appointed professor of both psychology and marketing. “They’ve figured out how to offer a bargain in a way that the consumer doesn’t even know what they’re buying anymore.”

So how could consumers fight back? Some common strategies:

1. In certain areas, like credit card offers and statements or the calories in restaurant meals, having sellers display more information so that the consumer can theoretically make more rational decisions based on more information. Do all consumers use this information? Does the extra information “wear off” over time, particularly in light of enticing promotions or marketing? You can hear the same argument about health care from some people – if everyone knew, doctors and patients, how much every test or treatment was going to cost, different choices would be made.

2. Use an envelope system (or a debit card) for spending money so that one has a better idea of the total spending limit. This may help overspending but does it help eliminate all “impulse buys” or the deals one purchases?

3. Aren’t consumer education classes in high schools supposed to help talk about finances and such? And do they help much? Do such classes typically talk about how marketing works and different ways to think about deals?

4. There are companies that claim to not offer deals and have “no-haggle prices” or something like that. Think of CarMax or Saturn. Since most other retailers do offer deals, some companies can take an opposite tack.

The conclusion: prices are a social construction and taps into basic human impulses to avoid losses (paying the higher price)

Is the American Sun Belt boom over?

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One of the biggest changes in the American population in the last sixty years has been the migration to the Sun Belt. But new data suggests that this boom may have come to an end:

Between 2007 and 2010, Florida lost more people to internal migration than it gained, for the first time since the 1940s. Nevada, too, which had been growing for decades, had a net migration loss of 30,000 in 2009. And Arizona had a net gain of just 5000, way down from 90,000 five years before.

Meanwhile, New York and California both saw their net losses shrink in 2009 by more than half since 2005.

The analysis, based on Census Bureau and IRS data, was conducted by the Carsey Institute at the University of New Hampshire.

What explains the shift? The Sun Belt states, of course, were hit hard by the housing bust that helped trigger the recession and its aftermath. The early aughts housing boom was responsible for much of the growth in places like Clark County, Nev., and Maricopa County, Ariz. in the first place.

But just as important, migration as a whole, which has been on the wane for three decades, has really tailed off since the downturn began.

The economic crisis has limited mobility across the United States, particularly for the less wealthy who are then more tied to existing jobs and homes.

It will be interesting to see whether this trend continues or (1) the Sun Belt will grow again in the future or, in a longer shot, (2) older cities in the Midwest and Northeast (“Rust Belt”) regain some of the population that shifted south and west. In other words, once people have some more freedom to move, what will they choose to do and what social forces will push or pull them in certain directions?

Is feminism over?

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A short piece in USA Today suggests many young women today don’t want to be labeled as feminists:

The feminist has been portrayed as a woman who was “unhappy, angry, humorless and didn’t shave any part of her body,” says Terry O’Neill, national president of the National Organization for Women, which this weekend marks its founding 45 years ago with an event at Rollins College in Winter Park, Fla.

The stereotype, she adds, “became very powerful.” And it’s hard to get past for many young women today…

Sociologist Michael Kimmel of Stony Brook University, Stony Brook, N.Y., finds that reaction widespread. “Most of my women students have said ‘Feminism was your generation’s issue and we won. We can now do anything we want,'” he says…

Wendy Brandon, an associate professor of education and women’s studies at Rollins, says the women’s movement has evolved to focus more on what’s termed the “intersectionality” of gender, race, class and sexual orientation.

Quick thoughts:

1. We need more data on this. This article has completely anecdotal evidence.At the same time, I’ve heard similar responses from my students.

1a. I easily found a 2002 report from Gallup on the issue. As of 2001, 25% of women considered themselves feminists. This was down from 31% in 1991. This suggests that the term has been on a decline for a while. Or perhaps many women were never willing to call themselves feminists?

1b. However, the data also suggests that when asked about specific issues (pay, etc.), more people say work still needs to be done. So the label is more of the issue, not the issues raised.

2. If the label itself is a problem (similar to the connotations with the descriptor “liberal”?), why not look for a new term? Or run advertising campaigns to change the image of the term?

3. How much have arguments within the feminist itself hampered their efforts?

New Census data on income inequality by state, metro areas

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Based on American Community Survey data from 2005 and 2009 and working on the assumption that “Spatial income inequality is neither intrinsically bad nor good,” the Census has a new report on income inequality. Here are some of the findings:

The report, by Daniel H. Weinberg, analyzed income data at various geographical levels and found that the region encompassing New York, northern New Jersey, Long Island and parts of Pennsylvania had the highest income inequality of any large metro area.

New York State also has the highest income inequality of all 50 states (although Washington, D.C., was worse).

Below is a map showing three measures of income inequality for each state: the Gini index (which ranges from 0.0, when all households have equal shares of income, to 1.0, when one household has all the income and the rest has none); a ratio of household income at the 90th percentile to that at the 10th percentile; and a ratio of household income at the 95th percentile to that at the 20th…

After New York, Connecticut, Louisiana, Mississippi and Texas have among the most unequal income distributions. At the low end are New Hampshire, Alaska and Utah, which is the most economically homogenous state in the nation.

The states that are above the US averages are an interesting group: Texas, New York, and California (tied to larger populations?) but also Louisiana, Mississippi, Alabama, Connecticut, Massachusetts, and Washington D.C. Table 8 and 9 of the report have correlations and regression coefficients to look at the relationship of inequality measures to demographic characteristics. (Intriguingly, the regression is a stepwise regression analysis.)

Of more local interest: Illinois is lower than the US averages on two of the three measures and Chicago has a very similar Gini Index to the US average. And of places with more than 100,000 people, Elgin, Illinois has the lowest Gini Index value.

Here is part of the conclusion of the report:

This paper has shown that low income inequality at the neighborhood level is most likely a result of income sorting. In other words, it may be that higher-income households, when they can, choose to live away from lower-income ones, sometimes forming “enclaves” with little income variation. Alternatively, it may be that developers concentrate higher-end houses in certain tracts and those can be afforded only by households of higher incomes.

This uses more neutral language of sorting but we could probably tie this to larger processes of residential segregation: those with money (with wealth related to race) have the opportunity to live in their own communities and leave everyone else behind.

It will be interesting to see how this report gets spun by Occupy Wall Street supporters and those opposed and in the ongoing presidential race.

Argument: Chomsky wrong to suggest Twitter is “superficial, shallow, evanescent”

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Nathan Jurgenson argues that Noam Chomsky’s thoughts about Twitter are misguided:

Noam Chomsky has been one of the most important critics of the way big media crowd out “everyday” voices in order to control knowledge and “manufacture consent.” So it is surprising that the MIT linguist dismisses much of our new digital communications produced from the bottom-up as “superficial, shallow, evanescent.” We have heard this critique of texting and tweeting from many others, such as Andrew Keen and Nicholas Carr. And these claims are important because they put Twitter and texting in a hierarchy of thought. Among other things, Chomsky and Co. are making assertions that one way of communicating, thinking and knowing is better than another…

Claiming that certain styles of communicating and knowing are not serious and not worthy of extended attention is nothing new. It’s akin to those claims that graffiti isn’t art and rap isn’t music. The study of knowledge (aka epistemology) is filled with revealing works by people like Michel Foucault, Jean-François Lyotard or Patricia Hill Collins who show how ways of knowing get disqualified or subjugated as less true, deep or important…

In fact, in the debate about whether rapid and social media really are inherently less deep than other media, there are compelling arguments for and against. Yes, any individual tweet might be superficial, but a stream of tweets from a political confrontation like Tahrir Square, a war zone like Gaza or a list of carefully-selected thinkers makes for a collection of expression that is anything but shallow. Social media is like radio: It all depends on how you tune it…

Chomsky, a politically progressive linguist, should know better than to dismiss new forms of language-production that he does not understand as “shallow.” This argument, whether voiced by him or others, risks reducing those who primarily communicate in this way as an “other,” one who is less fully human and capable. This was Foucault’s point: Any claim to knowledge is always a claim to power. We might ask Chomsky today, when digital communications are disqualified as less deep, who benefits?

Back to a classic question: is it the medium or the message? Is there something inherent about 140 character statements and how they must be put together that makes them different than other forms of human communication? I like that Jurgenson notes historical precedent: these arguments have also accompanied the introduction of radio, television, and the Internet.

But could we tweak Chomsky’s thoughts to make them more palatable? What if Chomsky had said that the average Twitter experience was superficial, would he be incorrect? Perhaps the right comparison is necessary – Twitter is more superficial compared to face-to-face contact? But is it more superficial than no contact since face-to-face time is limited? Jurgenson emphasizes the big picture of Twitter, its ability to bring people together and give people the opportunity to follow others and “tune in.” In particular, Twitter and other social media forms allow the average person in the world to potentially have a voice in a way that was never possible before. But for the average user, how much are they benefiting – are they tuned in to major social movements or celebrity feeds? What their friends are saying right now or progress updates from non-profit organizations? Is this a beneficial public space for the average user?

Additionally, does it matter here if Twitter had advertisements and made a big push to make money off of this versus providing a more democratic space? Is Twitter more democratic and deep than Facebook? How would one decide?

In the end, is this simply a generational split?

(See earlier posts on a similar topic: Malcolm Gladwell on the power of Twitter, how Twitter contributed (or didn’t) to movements in the Middle East, and whether using Twitter in the classroom improves student learning outcomes.)

Cities ranked by the “Trick or Treat Index”

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Richard Florida has put some of his data to use to answer an important question: what are the best cities in the united States for trick or treating on Halloween?

According to National Retail Federation projections, Americans will spend $6.86 billion on Halloween this year, up from $3.3 billion in 2005 when a lot fewer of us were out of work. But even as Halloween edges up on Christmas as a shopping opportunity, the trick-or-treating experience is a lot less universal than it was. In some towns, you see hardly any unsupervised trick-or-treaters after dark; in other places—Brooklyn Heights or my neighborhood in Toronto leap to mind—there are more kids than you can imagine.

Herewith the 2011 edition of the Trick-or-Treater Index developed with the ever-able number-crunching of my Martin Prosperity Institute colleague, Charlotta Mellander. The 2011 Index is based on the following five metrics: the share of children aged 5 to 14; median household income (figuring the haul will be better in more affluent metros), population density, walkability (measured as the percentage of people who walk or bike to work) and creative spirit (which we measured as the percentage of artists, designers, and other cultural creatives). The data are from the American Community Survey and cover all U.S. metro areas, both their cores and suburbs…

As for the top ranking metros, Bridgeport-Stamford-Norwalk, Connecticut, comes in first again this year. Greater New York has moved up to second place, followed by Chicago, greater Washington, D.C., and the twin cities of Minneapolis-St. Paul. Los Angeles, last year’s runner-up, has dropped to 7th place. Big metros dominate the top spots, but Lancaster, Pennsylvania, has moved all the way up from 16th last year to 6th on our 2011 rankings. And college towns like Ann Arbor, Michigan, Boulder, Colorado, and New Haven, Connecticut, also rank among the top 25.

This reminds me of another recent odd use of data that ranked the luckiest cities. So people with more money, who are more creative, and live in more walkable areas necessarily give more or better candy? Might they also be the people who are more likely to give substitutes to candy? Could this also be related to health measures, like obesity or life expectancy? This seems like opportunistic, atheoretical data mining meant to get a few page clicks (like me).

And since there are probably few people who would go to a whole new metropolitan area just to get candy, wouldn’t this be a better analysis if it was at a zip code, community, or census block level?

Linking sports fandom and faith: “A New Cubs Theo-logy”

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In the past, I’ve likened the faith many fans in Chicago have that the Chicago Cubs will one day win the World Series to religious faith where you have to believe in things unseen. The Chicago Tribune reinforced this idea with their header on Wednesday’s front page that read “A New Cubs Theo-logy” to introduce coverage of the naming of Theo Epstein as director of baseball operations. Additionally, coverage of Epstein has occasionally hailed him as the “savior” of the Cubs.

This is another great example of how sports can be the functional equivalent of religion. Does it have rituals? Check – games and important moments that fans participate in or watch and then an ongoing lore of these moments. Does it provide meaning? Baseball, in particular, gives one something to do for 162 days of the year (and more with spring training, the playoffs, fan’s conventions). Does it have totems? Check – perhaps the Cubs “W” flag, perhaps the anti-totem of the silly Billy Goat curse or Steve Bartman. Does it have religious leaders? Check – people like Ron Santo and even stranger fans like Ronnie Woo-Woo. Does it require faith? One hundred and three years without a World Series win and counting. Does it have a sanctuary/religious space? The “Friendly Confines” of Wrigley Field and perhaps the neighborhood bars where fans go for post-service activities.

In the end, sports get discussed in all sorts of religious and moral language.

More on increasing poor population in the suburbs: 53% increase between 2000 and 2010

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The New York Times reports on the growing population of the poor in the American suburbs:

The increase in the suburbs was 53 percent, compared with 26 percent in cities. The recession accelerated the pace: two-thirds of the new suburban poor were added from 2007 to 2010…

“The whole political class is just getting the memo that Ozzie and Harriet don’t live here anymore,” said Edward Hill, dean of the Levin College of Urban Affairs at Cleveland State University.

This shift has helped redefine the image of the suburbs. “The suburbs were always a place of opportunity — a better school, a bigger house, a better job,” said Scott Allard, an associate professor at the University of Chicago who focuses on social welfare policy and poverty. “Today, that’s not as true as the popular mythology would have us believe.”

Since 2000, the poverty roll has increased by five million in the suburbs, with large rises in metropolitan areas as different as Colorado Springs and Greensboro, N.C.

While these are interesting figures (and I’ve noted them before here and here – the original report from September is a month ahead of this Times piece), arguably the suburbs have never completely fit the Ozzie and Harriet image. While many suburban places were retreats for wealthy and middle-class whites, there have also been working-class suburbs and some non-white suburbs. There is indeed a “popular mythology” – but I wonder if suburban critics have also been interested in pushing this image.

A few other thoughts:

1. Do most Americans today even know the show Ozzie and Harriet? In its time, the show had a long run: 402 radio episodes (1944-1954), 435 television episodes (1952-1966). Even with a lot of episodes, this show seems to have been syndicated less than some other shows.

2. If a greater percentage of the poor in metropolitan areas are now in suburbs, is this considered a positive thing for big cities?

3. Do we have any data on what happens to the poor in suburbs – do they have higher levels of social mobility than the poor in the city or rural areas? Additionally, the article suggests jobs and housing have helped increase the suburban poor population but what is the exact data on this?

Tying purchases of larger fast food items to McMansions and status seeking

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A forthcoming study from researchers from Paris and Northwestern University shows that powerless people make larger fast food purchases in order to show their status:

Consumers who feel powerless reach for extra-large portions of food in an effort to increase their social standing in the eyes of others, a new study suggests.

“An ongoing trend in food consumption is consumers’ tendency to eat more and more,” the researchers wrote in the study to be published in the April 2012 print edition of the Journal of Consumer Research. “The increase in food consumption is particularly prevalent among vulnerable populations, such as lower socioeconomic status consumers.”…

The study authors noted that cultural norms associate some larger items, such as houses, vehicles or flatscreen TVs, with wealth, success and high social status. If consumers feel unhappy with their status, they may take this belief and apply it to food, the researchers suggested.

These consumers may attempt to compensate for their perceived lower status by showing others that they can afford to buy the larger sizes, but instead of a Mcmansion they buy larger portion sizes, according to the researchers. In one of the experiments, the participants perceived that consumers who bought a large coffee at a cafe had a higher status than those who chose medium or small — even when the price of all sizes was the same.

It seems that the key here is that these are the decisions made by powerless people, people who have limited, more legitimate ways to show off their status. So do the authors suggest that people with more power don’t buy items to simply show status? This is an argument typically made about McMansions and SUVs: certain people with money feel the need to show off their wealth with these more ostentatious, larger purchases. On the other hand, the implication is that people with more education or taste would consume other sorts of items, not seeking status. Really? A designer larger, green home isn’t also somewhat about status? Going smaller is necessarily less about status?

I would love to see results of similar experiments done with different groups regarding some of the other consumer items mentioned in this report. I suspect we might find that status seeking purchases look different across different socioeconomic statuses, echoing Bourdieu’s distinctions between those who little capital (in this fast food study) versus more capital and also between those with more education and more money.

Twentysomething: “What people in the past might have gotten from church, I get from the Internet and Facebook”

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In a small segment of a larger interesting article about “twentysomethings” (known in some academic circles as “emerging adults”), one twentysomething blogger talks about the role the Internet plays in her generation’s lives:

Thorman suffered the post-college blues. She worked in an entry-level job, was in a so-so relationship, and wondered if this was all there was to life. Her existence, she says, felt inconsequential: “You graduate from college and you want to matter and be a part of something bigger.”

Then she launched her blog, and all of a sudden she was engaging hundreds of people from around the world in a discussion. The Internet gave her a place for connection and community much like neighborhood bars and churches did for previous generations.

Thorman is part of the 25 percent of twentysomethings today who say they have no religious affiliation. “What people in the past might have gotten from church, I get from the Internet and Facebook,” she says. “That is our religion.”

I have read a number of articles about SNS and Facebook use among emerging adults but I’ve never quite seen this idea before: religion has been replaced by Internet communities.

Additionally, the motivation for being part of these communities is different:

But blogging isn’t just about community and connectivity. It’s fundamentally about the individual. “I like blogging because I feel like a mini-celebrity,” Thorman says.

She’s not the only one to express that sentiment. “Attention is my drug,” Julia Allison told a New York Times writer. Allison is a Georgetown grad who became an Internet celebrity in her twenties and whose photo landed on the cover of Wired magazine with the headline GET INTERNET FAMOUS! EVEN IF YOU’RE NOBODY—JULIA ALLISON AND THE SECRETS OF SELF-PROMOTION. A Pew Research poll asked 18-to-25-year-olds about their generation’s top goals, and 51 percent responded with “to be famous.”

But Thorman doesn’t want fame in the Paris Hilton way—famous for being famous. She wants to be recognized, on the Internet, for her insights and ideas.

These online communities are different than traditional religion then in that the focus is on the individual users and their accomplishments rather than a transcendent power or a totem (in Durkheimian terms).

Where will this all end up? Some options you will hear in the popular discourse:

1. Disillusionment. This article talks a lot about twentysomethings looking for fulfillment and the Internet helps provide this. But is this ultimately satisfying? What if one can’t find a fulfilling long-term career? What if the other choices that were not taken always look more attractive? This argument tends to come from older generations – is there a way that twentysomethings can avoid this?

2. This is just another sign of secularization as organized religion drops in influence among younger generations.

3. The America celebrity culture, literally at everyone’s fingertips both as consumers and producers, will continue to grow. This celebrity culture will make it difficult to have intellectual discussion and debates in an online realm where even the most traditional news organizations have to cater to celebrity-hungry web surfers.

4. If these are the goals of this generation, who will tackle the big issues like dealing with poverty in the world, paying for Social Security and Medicare, etc?

It will be fascinating to watch how this all shakes out.