Alchemy

by Rory Sutherland

  In many ways, expensive advertising and brands arise as a solution to a problem identified by George Akerlof in his 1970 paper ‘The Market for Lemons’ in the Quarterly Journal of Economics. The problem is known as ‘information asymmetry’, whereby the seller knows more about what he is selling than the buyer knows about what he is buying. This lesson was learned the hard way in Eastern Bloc countries under communism; brands were considered un-Marxist, so bread was simply labelled ‘bread’. Customers had no idea who had made it or whom to blame if it arrived full of maggots, and couldn’t avoid that make in future if it did, because all bread packaging looked the same. Unhappy customers had no threat of sanction; happy customers had no prospect of rewarding producers through repeat custom. And so the bread was rubbish.

  The production of rivets under communism demonstrated a similar pattern. Typically a factory was given a monthly quota that it was required to manufacture – the unbranded rivets were then sent to a central rivets depository, where they intermingled with all the other factories’ rivets. From there, all the rivets, whose provenance was by now completely indistinguishable, would be transported to wherever they were needed. The Soviets soon found that, without a maker’s name attached to a product, no one had any incentive to make a quality product, which pushed quantity upwards and quality downwards. The easiest way to produce a million rivets every month was to produce a million bad rivets, which soon led to ships falling apart. Furthermore, you did not know which factory to blame, because the rivets had become commoditised, which is to say anonymised. Eventually the regime swallowed their ideological pride and made factories stamp their names on their rivets – the feedback mechanism was restored and quality returned to acceptable levels.

  I recently met a woman who lived under communism in Romania. A popular chocolate bar in that country at the time was manufactured in three different factories, but the quality of production between them differed so widely that they effectively produced three entirely different qualities of chocolate under the same brand name. By folding back part of the wrapper, it was possible to see an alphanumeric code that denoted, presumably for reasons of safety, which of the three factories had produced that particular bar. My friend, a young girl at the time, was under strict instructions from her mother only to buy this chocolate bar if the letter ‘B’ was displayed under the fold in the wrapper; if either of the other two letters were displayed, she wasn’t to buy it at all.

  Without the feedback loop made possible by distinctive and distinguishable petals or brands, nothing can improve. The loop exists because insects or people learn to differentiate between the more and less rewarding plants or brands, and then direct their behaviour accordingly. Without this mechanism there is no incentive to improve your product, because the benefits will accrue to everybody equally; in addition, there is an ever-present incentive to let product quality slip, because you will reap the immediate gains, while the reputational consequences will hurt everyone else equally. This explains why it is necessary for markets to endure the apparent inefficiency of supporting different and competing products with expensively differentiated identities, in order to reward quality control and innovation.

  Several years ago there was a national crisis in Britain regarding confidence in the meat supply, after horsemeat was found to have been secretly mixed into supplies of certified beef.* While nobody died – in fact, nobody even got ill – it nevertheless significantly eroded the public’s trust in the food industry, and rightly so. It wasn’t branded beef that was affected – McDonald’s emerged from the scandal completely unscathed – the beef that was contaminated was typically labelled ‘certified beef from a variety of sources’. No one supplying beef that they knew would be mingled with other people’s beef had any fear of reputational shame, and there was consequently nothing to discourage any of the suppliers of this commoditised beef from adding a bit of horsemeat into the mix.

  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.

  Evolution solved the problem of asymmetric information and trust for flowers and bees back when our ancestors were still living in trees. Bees have been around for at least 20 million years, floral plants a good deal longer. My analogy between signalling in the biological world and advertising in the commercial world may explain something I have noticed for years: if you talk to economists, they tend to hate advertising and barely understand it at all, while if you talk to biologists they understand it perfectly. For decades, the most sympathetic ear I had at The Economist in London was not their marketing correspondent (who seemed to genuinely hate marketing) but their science correspondent, whose background was as an evolutionary biologist.

  Part 4: Subconscious Hacking: Signalling to Ourselves

  4.1: The Placebo Effect

  I earlier described how it is often necessary to use oblique approaches to change the behaviour of others. Now I would like to suggest it can be equally necessary to use similar approaches to change your own behaviour.

  We’ll start by looking at the power of the placebo. My grandfather was a doctor from 1922 to the mid-1950s. He claimed that it was only after the advent of penicillin that he became a true medic: before antibiotics, he was partly a glorified witch doctor – the support he offered his patients through the psychological value of a doctor’s visit being as important as the pharmaceutical value of anything he prescribed.

  Are placebos, or placebo treatments such as homeopathy, scientific? Well, yes and no. And do they help? Well, sometimes. Placebos have no direct medical efficacy, but their effect on our psychology may be just as significant as a medical effect in some cases, especially if the condition – chronic pain, say, or depression – is more psychological than physiological.*

  I make a very simple point here: the fact that something does not work through a known and logical mechanism should not make us unwilling to adopt it. We used aspirin to reduce pain for a century without having the faintest idea of why it worked. Had we believed it was made from the tears of unicorns, it would have been silly, but it wouldn’t have made the product any less effective.

  4.2: Why Aspirin Should Be Reassuringly Expensive

  A few years ago, the rationalist killjoys at the Australian Competition and Consumer Commission prosecuted the global consumer goods manufacturer Reckitt Benckiser over four products: Nurofen Migraine Pain, Nurofen Tension Headache, Nurofen Period Pain and Nurofen Back Pain. Their complaint was that ‘each product claimed to target a specific pain, when in fact it was found that they all contained the same amount of the same active ingredient, ibuprofen lysine’ – the problem was that these variants were often sold at a higher price than the basic brand, despite being pharmacologically identical.

  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 red* 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 placebos work by prompting the body to invest more resources in its recovery.* He believes that evolution has calibrated our immune system to suit a harsher environment than the current one, so we need to convince our unconscious that the conditions for recovery are especially favourable in order for our immune system to work at full tilt. The assistance of doctors (whether witch or NHS), exotic potions (whether homeopathic or antibiotic) or the caring presence of relatives and friends can all create this illusion, yet policymakers hate the idea of any solution that involves such unconscious processes – too little is spent on researching the placebo effect in proportion to its importance.*

  Understanding the placebo effect is a useful way to begin to understand other forms of unconscious influence; it explains why we often behave in apparently irrational ways in order to influence unconscious processes – both our own and those of others. Additionally, our reluctance to exploit the placebo effect may offer some clues about our wider reluctance to adopt psychological solutions to problems, particularly when they are slightly counterintuitive or not conventionally logical. Let me explain.

  The placebo effect, like many other forms of alchemy, is an attempt to influence the mind or body’s automatic processes. Our unconscious, specifically our ‘adaptive unconscious’ as psychologist Timothy Wilson calls it in Strangers to Ourselves (2002), does not notice or process information in the same way we do consciously, and does not speak the same language that our consciousness does, but it holds the reins when it comes to much of our behaviour. This means that we often cannot alter subconscious processes through a direct logical act of will – we instead have to tinker with those things we can control to influence those things we can’t or manipulate our environment to create conditions conducive to an emotional state which we cannot will into being.

  Think about it. There are some phrases that just wouldn’t appear in the English language:*

  ‘I chose not to be angry.’

  ‘He plans to fall in love at 4.30pm tomorrow.’

  ‘She decided that she was no longer to feel uneasy in his presence.’

  ‘From that moment on, she determined no longer to be afraid of heights.’*

  ‘He decided to like spiders and snakes.’

  Things like this are not under our direct control, but are rather the product of instinctive and automatic emotions. There is a good evolutionary reason why we are imbued with these strong, involuntary feelings: feelings can be inherited, whereas reasons have to be taught, which means that evolution can select for emotions much more reliably than for reasons. To ensure your survival, it is much more reliable for evolution to give you an instinctive fear of snakes at birth than relying on each generation to teach its offspring to avoid them. Things like this aren’t in our software – they are in our hardware.

  In the same way, we all accept the fact that there are large areas of bodily function that we cannot control directly: I cannot make my pupils contract or dilate at will, and nor can I increase or slow my heart rate by telling my heart to speed up or slow down; that’s to say nothing about other bodily functions, such as digestion, sexual arousal, the secretions of the pancreas, the actions of the endocrine system or the workings of the immune system. For perfectly sensible evolutionary reasons, the regulation of these functions does not impinge on consciousness.* You might like to think of these processes as operating on an ‘auto’ setting, similar to that which exists on a modern camera – the useful function that means you don’t have to spend time fiddling around with the aperture, focus and shutter-speed settings every time you want to take a half-decent photograph.

  4.3: How We Can ‘Hack’ What We Can’t Control

  As with an automatic camera, so with your body’s autonomic systems – you can’t directly control either of them, but you can ‘hack’ them obliquely, by deliberately contriving the conditions that will generate the automatic response you want. To continue the photography analogy, imagine that you have a fully automatic camera and wish to deliberately overexpose a photograph. There isn’t a dial that enables you to prolong the shutter speed or enlarge the aperture, but you can achieve the same effect by pointing at something dark, triggering the auto-exposure mechanism and then panning back to the better-lit subject of your photograph.

  I have always been – unfashionably for a European – a devotee of automatic transmission in cars* and, as anyone who has driven the same model of automatic car for any length of time knows, you soon learn how to induce or prevent a gear change using the accelerator pedal alone. You do this by becoming increasingly attuned to the behaviour of your automatic gearbox, unconsciously developing the skill of encouraging it to do what you want. On nearing the brow of a hill, for instance, you might instinctively take your foot off the accelerator to prevent the gearbox from changing down unnecessarily for the remaining short climb. Manual car devotees are blind to this skill, because it is something you only learn to do through repeatedly driving the same automatic car. The truth is that you can control the gearbox of an automatic car, but you just have to do it obliquely. The same applies to human free will: we can control our actions and emotions to some extent, but we cannot do so directly, so we have to learn to do it indirectly – by foot rather than by hand.

  This indirect process of influence applies to all complex systems, of which the automatic gearbox and human psychology are merely two examples.* The problems we face arise because policy problems are given to the intellectual equivalent of manual car drivers, who believe that the only acceptable way to change gear is to use a gearstick, rather than indirectly with an accelerator pedal. But the trick is to accept that driving an automatic is much more creative than driving a manual: with a manual you merely tell the gearbox what to do, but when you are driving an automatic, you have to use seduction.*

  Imagine that you wish to dilate your pupils, increase your heart rate, decrease your heart rate or boost your immune system. Again, you cannot do this by a direct act of will, but you can use conscious mechanisms to produce unconscious effects. For instance, you can contract your pupils by staring at a light bulb or dilate them by walking into a darkened room.* You can increase your heart rate through jogging or decrease it through the practice of yoga or meditation. And, yes, if Nicholas Humphrey is right, you might be able to boost your immune system in the same way – you simply have to create the conditions that lead your immune system to believe that the present is a particularly advantageous time to invest its resources in healing wounds or combating infection. The actions required to create such conditions may involve a certain degree of what appears to be bullshit – but it is only bullshit when you don’t know what its reason is.

  It is this oblique hacking of unconscious emotional and physiological mechanisms that often causes suspicion of the placebo effect, and of related forms of alchemy. Essentially we like to imagine we have more free will than we really do, which means we favour direct interventions that preserve our inner delusion of personal autonomy, over oblique interventions that seem less logical.

  4.4: ‘The Conscious Mind Thinks It’s the Oval Office, When in Reality It’s the Press Office’

  Our conscious mind tries hard to preserve the illusion that it deliberately chose every action you have ever taken; in reality, in many of these decisions it was a bystander at best, and much of the time it did not even notice the decision being made. Despite this, it will still construct a story in which it was the decisive actor. For instance, ‘I saw the bus coming and jumped back on the kerb,’ while in fact, you may well have started jumping bef
ore you were even consciously aware of the bus.

  In the words of Jonathan Haidt,* ‘The conscious mind thinks it’s the Oval Office, when in reality it’s the press office.’ By this he means that we believe we are issuing executive orders, while most of the time we are actually engaged in hastily constructing plausible post-rationalisations to explain decisions taken somewhere else, for reasons we do not understand. But the fact that we can deploy reason to explain our actions post-hoc does not mean that it was reason that decided on that action in the first place, or indeed that the use of reason can help obtain it.

  Imagine an alien species with the power to fall asleep at will – they would regard human bedtime behaviour as essentially ridiculous. ‘Rather than just going to sleep, they go through a strange religious ritual,’ an alien anthropologist would remark. ‘They turn off lights, reduce all noise to a minimum and then remove the seven decorative cushions which for no apparent reason are placed at the head of the bed.* Then they lie in silence and darkness, in the hope that sleep descends upon them. And rather than simply waking up when they wish, they program a strange machine which sounds a bell at an appointed time, to nudge them back into consciousness. This seems ridiculous.’ Similarly, imagine an alien species that could decide how happy it wanted to be. They would regard the entire human entertainment industry as a spectacular economic waste.