Alchemy: The Surprising Power of Ideas That Don't Make Sense

by Rory Sutherland

Unfortunately, because reductionist logic has proved so reliable in the physical sciences, we now believe it must be applicable everywhere – even in the much messier field of human affairs. The models that dominate all human decision-making today are duly heavy on simplistic logic, and light on magic – a spreadsheet leaves no room for miracles. But what if this approach is wrong? What if, in our quest to recreate the certainty of the laws of physics, we are now too eager to impose the same consistency and certainty in fields where it has no place?

Here are some recent butterfly effect discoveries, from my own experience: A website adds a single extra option to its checkout procedure – and increases sales by $300m per year. An airline changes the way in which flights are presented – and sells £8m more of premium seating per year. A software company makes a seemingly inconsequential change to call-centre procedure – and retains business worth several million pounds. A publisher adds four trivial words to a call-centre script – and doubles the rate of conversion to sales. A fast-food outlet increases sales of a product by putting the price … up. All these disproportionate successes were, to an economist, entirely illogical. All of them worked. And all of them, apart from the first, were produced by a division of my advertising agency, Ogilvy, which I founded to look for counter-intuitive solutions to problems. We discovered that problems almost always have a plethora of seemingly irrational solutions waiting to be discovered, but that nobody is looking for them; everyone is too preoccupied with logic to look anywhere else. We also found, rather annoyingly, that the success of this approach did not always guarantee repeat business; it is difficult for a company, or indeed a government, to request a budget for the pursuit of such magical solutions, because a business case has to look logical.

Modern consumerism is the best-funded social science experiment in the world, the Galapagos Islands of human weirdness.

We could never have evolved to be rational – it makes you weak. Now, as reasonable people, you’re going to hate me saying this, and I don’t feel good saying it myself. But, for all the man’s faults, I think Donald Trump can solve many problems that the more rational Hillary Clinton simply wouldn’t have been able to address. I don’t admire him, but he is a decision maker from a different mould. For example, both candidates wanted manufacturing jobs to return to the United States. Hillary’s solution was logical – engagement in tripartite trade negotiations with Mexico and Canada. But Donald simply said, ‘We’re going to build a wall, and the Mexicans are going to pay.’ ‘Ah,’ you say. ‘But he’s never going to build that wall.’ And I agree with you – I think it highly unlikely that a wall will be built, and even less likely that the unlucky Mexicans will agree to pay for it. But here’s the thing: he may not need to build the wall to achieve his trade ambitions – he just needs people to believe that he might. Similarly, he doesn’t need to repeal the North American Free Trade Agreement – he just needs to raise it as a possibility. Irrational people are much more powerful than rational people, because their threats are so much more convincing. For perhaps thirty years, the prevailing economic consensus meant that no American carmaker felt they owed any patriotic duty to workers in their home country; had you suggested such a thing in any of their board meetings, you would have bee...

Behavioural economics is an odd term. As Warren Buffett’s business partner Charlie Munger once said, ‘If economics isn’t behavioural, I don’t know what the hell is.’ It’s true: in a more sensible world, economics would be a subdiscipline of psychology.fn1 Adam Smith was as much a behavioural economist as an economist – The Wealth of Nations (1776) doesn’t contain a single equation.

In his book Skin in the Game (2018), Taleb includes what might be the most interesting quotation on an individual’s politics I have ever read. Someonefn3 explains how, depending on context, he has entirely different political preferences: ‘At the federal level I am a Libertarian. At the state level, I am a Republican. At the town level, I am a Democrat. In my family I am a socialist. And with my dog I am a Marxist – from each according to his abilities, to each according to his needs.’

The late David Ogilvy, one of the greats of the American advertising industry and the founder of the company I work for, apparently once said, ‘The trouble with market research is that people don’t think what they feel, they don’t say what they think, and they don’t do what they say.’fn6 Trivers and Kurzban explained the evolutionary science behind that conundrum: we simply don’t have access to our genuine motivations, because it is not in our interest to know.

The second lens is standard economic theory, which doesn’t ask people what they do and doesn’t even observe what they do. Instead it assumes a narrow and overly ‘rationalistic’ view of human motivation, by focusing on a theoretical, one-dimensional conception of what it believes humans are trying to do. Again, behavioural economics has shown that it provides an incomplete and sometimes misleading view of human behaviour – neither the business nor the policy worlds have paid sufficient attention to the failings of economics and research.

One of my colleagues, the brilliant Tara Austin, had seen research that suggested that ‘Disney faces’ – large-eyed human faces with the proportions of young children – seemed to have a calming effect. Combining the two ideas, she created an experiment where shop shutters were painted with the faces of babies and toddlers by a local graffiti artist collective. By all measures, this seemed to reduce crime significantly;

Alongside Harrison’s remarkable technological work, there is also an interesting psychological aspect to this story. Though they awarded him a great deal of money for his invention, the prize was always denied to him, even though he demonstrated that his solution worked more than once. A great part of his later life was spent petitioning the authorities and complaining that he had been cheated of his reward. Nevil Maskelyne, a supporter of the ‘lunar distances’ method of astronomical calculation, is often portrayed as the villain for denying Harrison the prize – and it cannot have helped Harrison’s case when Maskelyne was made Astronomer Royal and a member of the prize-giving committee. But the real story is one of professional and academic hierarchy: to an astronomer, the solution of an uneducated man whose life had been spent making clocks did not seem worthy of recognition.

Until 1948, the Wright brothers’ Flyer was displayed not in the Smithsonian, but in the Science Museum in London. This might seem strange, but for years after the bicycle shop owners from Ohio had flown their manned heavier-than-air device on North Carolina’s Outer Banks, the US Government refused to acknowledge their achievement, maintaining that a government-sponsored programme had actually been first.fn3 In 1847, when Ignaz Semmelweis decisively proved that hand-washing by doctors would cut the incidence of puerperal fever, a condition that could be fatal during childbirth, he was spurned. All too often, what matters is not whether an idea is true or effective, but whether it fits with the preconceptions of a dominant cabal.fn4

I had always innocently assumed that after Edward Jenner discovered a vaccination against smallpox he would have presented his findings before sitting back to enjoy the acclaim. The truth was nothing of the kind; he spent the rest of his life defending his idea against a large number of people who had profited from an earlier practice called variolation, and were reluctant to admit that anything else was better.

The scramjet or the hyperloopfn1 might be potential moonshots, but making land- or air-travel-speeds so much faster is a really hard problem – and comes with unforeseen dangers.fn2 By contrast, I think ‘psychological moonshots’ are comparatively easy. Making a train journey 20 per cent faster might cost hundreds of millions, but making it 20 per cent more enjoyable may cost almost nothing.

Even stranger than our teeth-brushing behaviour is our preference for stripy toothpaste. When it first appeared, in a product called Stripe, it aroused a great deal of debate over how it was made. Many people dissected the empty container; others froze a full tube and then cut it open in a cross section.fn3 What was strange was that nobody ever asked ‘Why?’ After all, the moment toothpaste enters your mouth, all the ingredients are mixed together, so what was the point of keeping them separate in the tube? There are two explanations: 1) simple childish novelty and 2) psycho-logic. Psycho-logically, the stripes serve as a signal: a claim that a toothpaste performed more than one function (fighting cavities, tackling infection and freshening breath) was thought to be more convincing if the toothpaste contained three visibly separate active ingredients. In general, people are impressed by any visible extra effort that goes into a product: if you simply say ‘this washing powder is better than our old powder’, it is a hollow claim. However, if you replace the powder with a gel, a tablet or some other form, the cost and effort which have gone into the change make it more plausible to the purchaser there may have been some real innovation in the new contents.

What people do with their own money (their ‘revealed preferences’) is generally a better guide to what they really want than their own reported wants and needs.

One of the great contributors to the profits of high-end restaurants is the fact that bottled water comes in two types, enabling waiters to ask ‘still or sparkling?’, making it rather difficult to say ‘just tap’. I had the idea of turning up at an apartment with five smoke detectors; the fire officer was to casually carry in all five, before saying, ‘I think we can make do with three here … How many would you like, three or four?’ We are highly social creatures and just as we find it very difficult to answer the question ‘still or sparkling?’ with ‘tap’, it is also difficult to answer the question about ‘three or four’ smoke detectors with with ‘one’. As Nassim Nicholas Taleb remarks, ‘the way a question is phrased is itself information’.

At its worst, neo-liberalism takes a dynamic system like free market capitalism, which is capable of spectacular creativity and ingenuity, and reduces it to a boring exercise in ‘how we can buy these widgets 10 per cent cheaper’. It has also propelled a narrow-minded technocratic caste into power, who achieve the appearance of expert certainty by ignoring large parts of what makes markets so interesting. The psychological complexity of human behaviour is reduced to a narrow set of assumptions about what people want, which means they design a world for logical rather than psycho-logical people. And so we have faster trains with uncomfortable seats departing from stark, modernist stations, whereas our unconscious may well prefer the opposite: slower trains with comfortable seats departing from ornate stations. This is not the fault of the markets; it is the fault of the people who have hijacked the definition of what markets should do. Strangely, as we have gained access to more information, data, processing power and better communications, we may also be losing the ability to see things in more than one way; the more data we have, the less room there is for things that can’t easily be used in computation. Far from reducing our problems, technology may have equipped us with a rational straitjacket that limits our freedom to solve them.

Many other mathematical models involving humans make the mistake of assuming that 10 x 1 = 1 x 10. For instance, our tax system assumes that ten people who earn £70,000 for one year of their life should be taxed the same amount as one person who earns £70,000 for ten consecutive years, yet I have never heard anyone question this – is it another example of bad maths?

The same applies to hiring – we are much more likely to take risks when hiring ten people than when hiring one. If you hire ten people, you might expect one or two of them not to work out: you won’t risk your reputation if a couple of them leave after two years, or if one starts stealing staplers and photocopying his bottom at the Christmas party. But if you hire one person and they go rogue, you have visibly failed. So individuals who are hiring individuals may be needlessly risk averse; they are hiring potatoes. When hiring, we should understand that unconscious motivation and rational good sense overlap, but they do not completely coincide. A person engaged in recruitment may think they are trying to hire the best person for the job, but their subconscious motivation is subtly different. Yes, they want to hire a candidate who is likely to be good, but they are also frightened of hiring someone who might turn out to be bad – a low variance will be as appealing to them as a high average performance. If you want low variance, it pays to hire conventionally and adhere to the status quo, while people hiring a group of employees are much more likely to take a risk on some less conventional candidates. We can see this diversity mechanism clearly in house hunting. If I were to give you a budget to choose your perfect house, you would have a clear idea of what to buy, but it would typically be a bit boring. That’s because when you have one house, it cannot be too weak in any one...

talent. It wouldn’t matter much if only Goldman Sachs, say, or a few elite institutions used this criterion, but when everyone else copies the same approach, it is ludicrous. Since almost half of graduates should by definition fall below this hurdle, it will either result in thousands of people spending three years at university for no benefit or to grade inflation in universities, with degree classes becoming meaningless.fn2 This is another example of people not using reason to make better decisions, but simply for the appearance of being reasonable. As any game theorist knows, there is a virtue to making slightly random decisions that do not conform to established rules. In a competitive setting such as recruitment, an unconventional rule for spotting talent that nobody else uses may be far better than a ‘better’ rule which is in common use, because it will allow you to find talent that is undervalued by everyone else. One of the other problems with a logically consistent system for hiring people is that ambitious middle-class people can exploit it by ‘gaming the system’. Violin lessons – check, work placement at uncle’s bank – check, charity work with the disadvantaged – check,fn3 high GPA – check. By contrast, if you hire that brilliant backgammon player, you do know one thing. He’s genuinely talented at something – and it’s unlikely that his parents have spent a fortune on private backgammon lessons. Real excellence can come in odd packaging. Nassim Nicholas Taleb app...

In making decisions, we should at times be wary of paying too much attention to numerical metrics. When buying a house, numbers (such as number of rooms, floor space or journey time to work) are easy to compare, and tend to monopolise our attention. Architectural quality does not have a numerical score, and tends to sink lower in our priorities as a result, but there is no reason to assume that something is more important just because it is numerically expressible.

A good guess which stands up to observation is still science. So is a lucky accident. Business people and politicians do not quite understand this and tend to evaluate decisions by the rigour of the process that produces them, rather than by the rigour with which you evaluate their consequences.

Business, technology and, to a great extent, government have spent the last several decades engaged in an unrelenting quest for measurable gains in efficiency. However, what they have never asked, is whether people like efficiency as much as economic theory believes they do. The ‘doorman fallacy’, as I call it, is what happens when your strategy becomes synonymous with cost-saving and efficiency; first you define a hotel doorman’s role as ‘opening the door’, then you replace his role with an automatic door-opening mechanism. The problem arises because opening the door is only the notional role of a doorman; his other, less definable sources of value lie in a multiplicity of other functions, in addition to door-opening: taxi-hailing, security, vagrant discouragement, customer recognition, as well as in signalling the status of the hotel. The doorman may actually increase what you can charge for a night’s stay in your hotel. When every function of a business is looked at from the same narrow economic standpoint, the same game is applied endlessly. Define something narrowly, automate or streamline it – or remove it entirely – then regard the savings as profit. Is this, too, explained by argumentative thinking, where we would rather win an argument than be right?

The following is a perfect illustration of the tendency of modern business to pretend that economics is true, even when it isn’t. London’s West End theatres often send out emails to people who have attended their productions in the past, to encourage them to book tickets, and it was the job of an acquaintance of mine who worked as a marketing executive for a theatre company to send out these emails. Over time, she learned something that defied conventional economic rules; it seemed that if you sent out an email promoting a play or musical, you sold fewer tickets if you included an offer for reduced-price tickets with the email. Conversely, offering tickets at the full price seemed to increase demand. According to economic theory, this makes no sense at all, but in the real world it is perfectly plausible. After all, any theatre selling tickets at a discount clearly has plenty to spare, and from this it might be reasonable to infer that the entertainment on offer isn’t all that good. No one wants to spend £100–£200 on tickets, a meal, car-parking and babysitting, only to find that you would have had more fun watching television at home; in avoiding discounted theatre tickets, people are not being silly – they are showing a high degree of second-order social intelligence. Despite my friend’s discovery, her colleagues continued to demand that she discount tickets. She patiently explained to them that any discount would reduce the demand, so that they would end up selling fewe...

In 2006, Maria Klawe, a computer scientist and mathematician, was appointed president of Harvey Mudd College in California. At the time, only 10 per cent of the college’s computer science majors were women. The department devised a plan, aimed at luring in female students and making sure they actually enjoyed their computer science initiation, in the hopes of converting them to majors. A course previously entitled ‘Introduction to programming in Java’ was renamed ‘Creative approaches to problem solving in science and engineering using Python’.fn1 The professors further divided the class into groups – Gold for those with no coding experience and Black, for those with some coding experience.fn2 They also implemented Operation Eliminate the Macho Effect, in which males who showed off in class were taken aside and told to desist. Almost overnight, Harvey Mudd’s introductory computer science course went from being the most despised required course to the absolute favourite. That was just the beginning. Improving the introductory course obviously helped, but it was also important to ensure that women signed up for another class. The female professors took the students to the annual Grace Hopper Conference, an annual ‘celebration of women in technology’. It was an important step in demonstrating that there was nothing weird or anti-social about women working in tech. Finally, the college offered a summer of research for female students to apply their new-found talents to somethin...

HOW COLOMBIANS RE-IMAGINED LIONFISH (WITH A LITTLE HELP FROM OGILVY AND THE CHURCH) When Hurricane Andrew hit the south-eastern US in 1992, it was the worst hurricane in US history. It caused incalculable damage both to property and to the environment; however, its biggest environmental effect, perhaps, was not the loss of a species, but the opposite. In South Florida, the hurricane burst a large coastal aquarium tank, releasing an unwelcome species of fish into the Gulf of Mexico and the Caribbean. The lionfish comes from the tropical waters around Indonesia. Though beautiful to look at, it is a voracious predator of other fish, and is able to eat as many as 30 in half an hour. Furthermore, one female lionfish can produce over two million eggs per year, which was a particular problem in the Caribbean, where it has no natural predators. The decimation of local species threatened the environment and the economics of Colombia, much of which depends on fishing. It was also destroying the ecology of coral reefs. This was when some colleagues of mine borrowed an idea from Frederick the Great; Ogilvy & Mather in Bogotá decided that the solution was to create a predator for the lionfish – humans. The simplest and most cost-effective way to rid Colombia’s waters of lionfish was to encourage people to eat them, which would encourage anglers to catch them. The agency recruited the top chefs in Colombia and encouraged them to create lionfish recipes for the best restaurants. As they ...

A knowledge of the human physique is considered essential in designing a chair, but a knowledge of human psychology is rarely considered useful, never mind a requirement, when someone is asked to design a pension scheme, a portable music player or a railway. Who is the Herman Miller of pensions, or the Steve Jobs of tax-return design? These people are starting to emerge – but it has been a painfully long wait. If there is a mystery at the heart of this book, it is why psychology has been so peculiarly uninfluential in business and in policy-making when, whether done well or badly, it makes a spectacular difference.

‘The term affordance refers to the perceived and actual properties of the thing, primarily those fundamental properties that determine just how the thing could possibly be used. […] Affordances provide strong clues to the operations of things. Plates are for pushing. Knobs are for turning. Slots are for inserting things into. Balls are for throwing or bouncing. When affordances are taken advantage of, the user knows what to do just by looking: no picture, label, or instruction needed.’

‘No one ever got fired for buying IBM’ was never the company’s official slogan – but when it gained currency among corporate buyers of IT systems, it became what several commentators have called ‘the most valuable marketing mantra in existence’. The strongest marketing approach in a business-to-business context comes not from explaining that your product is good, but from sowing fear, uncertainty and doubt (now commonly abbreviated as FUD) around the available alternatives. The desire to make good decisions and the urge not to get fired or blamed may at first seem to be similar motivations, but they are, in fact, never quite the same thing, and may sometimes be diametrically different.

For instance, in London I can put my two daughters into a car driven by a complete stranger and rely on them to be driven safely to their destination, because the stranger is driving a black cab. Before anyone can drive a black cab, he or she is forced to undergo a gruelling four-year initiation programme known as the Knowledge, for which they are required to memorise every street, major building and commercial premises within six and a half miles of Charing Cross Station, an area that includes 25,000 streets and 20,000 landmarks. This requires that they spend most of their spare evenings and weekends riding around on mopeds on test routes, before appearing in front of regular examination panels to test their knowledge of the quickest or shortest route between any two points; so gruelling is the process that it seems to enlarge the hippocampus of those who take part in it. In cabbie folklore, the model for the Knowledge was first suggested by Prince Albert.fn1 The test is certainly Teutonically stringent: over 70 per cent of the applicants either fail or drop out.fn2 As useful as it once was, many people feel the Knowledge has been made superfluous by the arrival of satnavs and Google Maps. Conventional economic thinking, obsessed with ‘market efficiency’, would argue that the Knowledge seems a ‘barrier to entry’ erected to maintain the scarcity of cab drivers. I was tempted to agree – but that was before I realised that the Knowledge had as much value as a signal than a n...

Likewise, when your company pays your salary each month, it says you are worth that money for now; when it sends you on an expensive training course, it signals that it is committed to you for at least a few years.fn2

If fish (and even some symbiotic plants) have evolved to spot this sort of distinction, it seems perfectly plausible that humans instinctively can do the same, and prefer to do business with brands with whom they have longer-term relationships. This theory, if true, also explains some counterintuitive findings in customer behaviour: it has long surprised observers that, if a customer has a problem and a brand resolves it in a satisfactory manner, the customer becomes a more loyal customer than if the fault had not occurred in the first place. Odd, until you realise that solving a problem for a customer at your own expense is a good way of signalling your commitment to a future relationship.

being rude isn’t so different from being polite, but it requires less effort. Politeness demands that we perform hundreds of little rituals, from opening doors to standing up when someone enters the room, all of which are more effortful than the alternative. By such oblique means we convey that we care about their opinion – and about our reputation.

Bits deliver information, but costliness carries meaning.

The psychophysicist Mark Changizi has a simple evolutionary explanation for why water ‘doesn’t taste of anything’: he thinks that the human taste mechanism has been calibrated not to notice the taste of water, so it is optimally attuned to the taste of anything that might be polluting it. If water tasted like Dr Pepper, it would be easier for sensory overload to drown out the hint of ‘dead sheep’, which would alert us to the fact that a car-cass was decaying in a pool five hundred yards upstream. Water ‘tastes of nothing’, so we notice the smallest thing which deviates from this. You can try a similar experiment with young children. Feed them their favourite food, but add a subtle herb or spice. They will find it revolting, because the slight deviation from what they expect alarms them into believing it is somehow unsafe.

The meaning in these things derives from the consumption of some costly resource – which, if not money, may be talent, or effort, or time or skill or humour or, in the case of risqué humour, bravery.fn2 But it has to contain something costly, otherwise it is just noise. Bravery and wit can be a form of costly signalling.

Since Darwin was enthusiastic about the idea, Wallace asked the Entomological Society of London to test his hypothesis. The entomologist John Jenner Weir conducted experiments with caterpillars and birds in his aviary, and in 1869 provided the first experimental evidence for warning coloration in animals. The evolution of aposematism, literally a ‘stay away sign’ or ‘warning off’, surprised nineteenth-century naturalists because the conspicuous signal suggested a higher chance of predation. However, you might also argue that aposematic colouration might be explained as a form of costly signalling: ‘I’m not trying to hide, therefore there might be a good reason not to eat me.’fn4 It might be a good rule of thumb for animals to avoid eating brightly coloured animals, since something that doesn’t need to adopt camouflage has clearly survived through some strategy other than concealment, and hence it might be best avoided. Here again, we have a case where doing something ostensibly irrational conveys more meaning than something that makes sense. It has meaning precisely because it is difficult to do.

However, the theory of sexual selection was a truly extraordinary, outside-the-box idea, and it still is; once you understand it, a whole host of behaviours that were previously baffling or seemingly irrational suddenly make perfect sense. The ideas that emerge from sexual selection theory explain not only natural anomalies such as the peacock’s tail, but also the popularity of many seemingly insane human behaviours and tastes, from the existence of Veblen goodsfn5 such as caviar, to more mundane absurdities such as the typewriter. For almost a century in which few men knew how to type, the typewriter must surely have damaged business productivity to an astounding degree, because it meant that every single communication in business or government had to be written twice: once in longhand by the originator and then again by the typist or typing pool. A series of simple amendments could delay a letter or memo by a week, but the ownership and use of a typewriter was a signal that you were a serious business – any provincial solicitor who persisted in writing letters by hand became a tailless peacock.

What this product needs is a brand. Without a distinctive brand identity, there is no incentive to improve your product – and no way for customers to choose well, or to reward the best manufacturer. Secondly, we felt uneasy buying something that cost a few hundred pounds without the reassurance of a recognisable name. British ad-man Robin Wight calls this instinct ‘the Reputation Reflex’ – although instinctive and largely unconscious, it is perfectly rational, because we intuitively understand that someone with a reputable brand identity has more to lose from selling a bad product than someone with no reputation at risk.fn2

This matters, because conversations about the marketing of brands tend to focus on hair-splitting distinctions between fairly good products. We often forget that, without this assurance of quality, there simply isn’t enough trust for markets to function at all, which means that perfectly good ideas can fail. Branding isn’t just something to add to great products – it’s essential to their existence.

While I am sure the ACCC’s chemical facts were accurate, their psychology seems to have been wrong because, for me, Nurofen hadn’t gone far enough. I want to see even more specific variants of pain relief: ‘I Can’t Find My Car Keys Nurofen’ or ‘Nurofen for People Whose Neighbours Like Reggae’. Again, these need contain no additional ingredients: the only distinguishing feature would be the packaging and the promise. I’m not being entirely frivolous: research into the placebo effect shows that branded analgesics are more effective. Furthermore, promoting a drug as a cure for a narrowly defined condition, as Nurofen did, also increases placebo power, as does raising its price or changing the colour: everything the company was doing added to the efficacy of the product. It is impossible to buy expensive aspirin in the UK, yet it is a waste of this wonder drug to sell it for 79p in drab packaging, when you could make it much better by packaging it lavishly, colouring the pills redfn1 and charging more. Sometimes I have a £3.29 headache rather than a 79p one. I try to stockpile the pricier brands I buy in the US, because I find they work better. Yes, I know it’s bullshit but, as we’ve already seen, placebos work even if you tell people they are placebos. Or, to put it another way, a dock leaf might soothe the pain of a nettle sting on even Richard Dawkins’s leg, regardless of any scientific evidence he had of their uselessness. The psychologist Nicholas Humphrey argues that pla...

‘THE CONSCIOUS MIND THINKS IT’S THE OVAL OFFICE, WHEN IN REALITY IT’S THE PRESS OFFICE’

The idea, most simply expressed, is this: ‘People do not choose Brand A over Brand B because they think Brand A is better, but because they are more certain that it is good.’fn2

IS OBJECTIVITY OVERRATED? You may have never heard the term ‘psychophysics’, which is essentially the study of how the neurobiology of perception varies among different species, and how what we see, hear, taste and feel differs from ‘objective’ reality. For instance, different species, as I will soon explain, perceive colour very differently, since receptors in the eyes are sensitised to different parts of the light spectrum. More importantly, our different senses – though we don’t realise this – act in concert; what we see affects what we hear, and what we feel affects what we taste.fn1 A few years ago, the British chocolate manufacturer Cadbury’s received a large number of customer complaints, claiming that they had changed the taste of their Dairy Milk brand. They were at first baffled, because the formulation hadn’t been altered for years. However, what they had done was change the shapes of the blocks you would break off a bar, rounding their corners. And smoother shapes taste sweeter. Truly.

Translation errors can be expensive, and at times gruesomely so. The following is from‘Mokusatsu: one word, Two Lessons’, a declassified article in the National Security Agency’s Technical Journal (Fall 1968): In July of 1945 allied leaders meeting in Potsdam submitted a stiffly worded declaration of surrender terms and waited anxiously for the Japanese reply. The terms had included a statement to the effect that any negative answer would invite ‘prompt and utter destruction’. Truman, Churchill, Stalin, and Chiang Kai-Shek stated that they hoped that Japan would agree to surrender unconditionally and prevent devastation of the Japanese homeland and that they patiently awaited Japan’s answer. Reporters in Tokyo questioned Japanese Premier Kantaro Suzuki about his government’s reaction to the Potsdam Declaration. Since no formal decision had been reached at the time, Suzuki, falling back on the politician’s old standby answer to reporters, replied that he was withholding comment. He used the Japanese word ‘mokusatsu’, derived from the word for ‘silence’. However, the word has other meanings, quite different from that intended by Suzuki. Alas, international news agencies saw fit to tell the world that in the eyes of the Japanese government the ultimatum was ‘not worthy of comment.’ US officials, angered by the tone of Suzuki’s statement and obviously seeing it as another typical example of the fanatical Banzai and Kamikaze spirit, decided on stern measures. Within ten days th...

In physics and engineering, objective models usually make problems easier to solve, while in economics and politics objectivity might make things harder. Some pressing economic and political issues could be solved easily and cheaply if we abandoned dogmatic universal models; just as TV designers don’t wrestle with the problem of producing the entire spectrum of visible light, policy-makers, designers and businessmen would be wise to spend less time trying to improve objective reality and more time studying human perception and moral instinct.

Every day, companies or governments wrongly make highly simplistic assumptions about what people care about. Two major US retailers, JCPenney and Macy’s, both fell foul of this misunderstanding when they tried to reduce their reliance on couponing and sales, and instead simply reduced their permanent prices. In both cases, the strategy was a commercial disaster. People didn’t want low prices – they wanted concrete savings. One possible explanation for this is that we are psychologically rivalrous, and like to feel we are getting a better deal than other people. If everyone can pay a low price, the thrill of having won out over other people disappears; a quantifiable saving makes one feel smart, while paying the same low prices as everyone else just makes us feel like cheapskates. Another possible explanation is that a low price, unlike a discount, does not allow people any scope to write a more cheerful narrative about a purchase after the event – ‘I saved £33’, rather than ‘I spent £45’.

Remember that words do not only affect the price of a dish – they can also change its taste. Five years ago, we received a worried phone call from Belgian colleague. One of their largest biscuit manufacturers had replaced their most popular brand with a new, lower-fat variant, but as soon as they released it onto the market, sales plummeted. They were bamboozled; they had performed extensive research and testing and many people could notice no difference in the taste of the new biscuit, and yet no one was buying the new version. This was one of those problems which I was able to solve without even leaving my chair. ‘I see,’ I said over the speakerphone, ‘And did you put “Now with lower fat” on the packaging of the biscuits?’ ‘Of course we did!’ they replied. ‘We’d spent months reducing the fat content of the biscuits – what’s the point of doing that if you don’t tell people about it?’ ‘There’s your problem,’ I said. ‘It doesn’t matter what something tastes like in blind tastings, if you put “low in fat” or any other health indicators on the packaging, you’ll make the contents taste worse.’ In the testing that they had conducted the biscuits had been unpackaged, and they had forgetten that packaging will also affect the taste.

don’t. Announcing even the tiniest tweaks to popular products has been a disaster for Vegemite, Milo and the Cadbury Creme Egg – even if they couldn’t otherwise, people notice a change in taste simply because a change in formulation has been announced. When Kraft wanted to introduce a healthier formulation for their Mac & Cheese, they were terrified of a similar reaction, particularly as the malignant combination of social media and newspapers keen for a story can turn a small number of hostile tweets into national news. So they removed the artificial yellow dye and added paprika, turmeric and other natural replacements – and then kept silent about it. Practically no one noticed a thing – until they announced the change retrospectively, under the headline ‘It’s changed. But it hasn’t.’ This way, they were able to gain the potential custom of people who had previously avoided the product because of its artificiality, without creating an imagined taste change among its regular customers, who suddenly discovered they had been eating the healthier variant all along.fn1

Deploy the ‘Goldilocks effect’ – the natural human bias that means that, when presented with three options, we are most likely to choose the one in the middle. Washing detergent manufacturers use language that normalises the lower and middle usage of the product, while implicitly stigmatising overdosing. For example, ‘Half a capful for light–normal wash’; ‘One capful for a full or heavy wash’; ‘Two capfuls for extreme soiling.’ This creates the impression that one would only use more than one capful if they had committed some brutal crime: as a result, even overdosers will likely use only one cap.fn3