Alchemy
Page 26
But if we are to understand the power of alchemy, we need better words to describe these motivations, and we must allow ourselves to oppose our natural urge to attach a rational explanation to everything we do. So one of my final tips is that alchemy is not only something you do – it’s what you don’t do.
I am not asking you to read this book and then perform any peculiar feat of intelligence – all that is necessary is to abandon the assumptions that you carry around with you like a comfort blanket every day. The difficult part is to abandon them all at the same time, which carries a risk of social embarrassment. For instance, given the modern open-plan office and our obsession with responding to emails as quickly as possible, it might be embarrassing or even damaging to spend 20 minutes staring blankly into space. However, without this time to disengage, it is harder to practise mental alchemy.*
Rebel against the Arithmocracy
My friend, the advertising expert Anthony Tasgal, coined the term ‘the arithmocracy’ to describe a new class of influential people who believe that their superior level of education qualifies them to make economic and political decisions. It includes economists, politicians of all types, management consultants, think tanks, civil servants and people much like me. I do not believe that these people form a conspiracy and I think most of what they do is intended for the common good. However, they’re dangerous because their worship of reason leaves them unable to imagine improvements to life, outside a narrow range of measures. Writing about such people in The Thing (1929), G.K. Chesterton explained:
‘In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.”’
A huge cast of well-paid people, from management consultants to economic advisors, earn their entire salaries by ripping out ‘Chesterton’s fences’. Technology companies have partly wrecked the advertising industry and journalism by starving the press of revenue – all under the guise of efficiency. However, they fail to understand that advertising is not really about efficiency – as one expert has put it, ‘The part you think is wasted is the part that actually works.’ Billions of dollars is now spent on digital advertising because it is assumed to be more efficient – you can target people more accurately and the cost of transmission of each message to a pair of appropriate eyeballs is lower – without it being clear that it is more effective. Procter & Gamble recently claimed to have reduced their digital ad spend by $150 million without noticing any reduction in sales – is it possible that digital advertising is actually strangely ineffectual?
Advertising clearly has a persuasive power that derives from more than just the information it imparts – but where does its power reside, and what makes a television commercial different from a banner? I can think of four things:
We know that a television commercial is expensive to make and the airtime is costly to buy.
We know that the television commercial is being broadcast to a large number of people, and that those other people are watching the commercial at the same time we are.
We know that the advertiser has limited control over who gets to see that message – in other words, that he doesn’t choose who he gets to make his promise to.
If the act of advertising generates any of its persuasion through these three mechanisms, it is plausible that digital advertising may appear efficient but in reality be surprisingly ineffective.
Remember my argument against Silicon Valley: an automatic door does not replace a doorman. In recent years, advertising could be seen to follow the same pattern:
Define advertising as targeted information transmission.
Install technology that optimises this narrow function.
Declare success, using metrics based on your original definition of function.
Capture cost savings for yourself and walk away.
The overly simplistic model of advertising assumes that we ask ‘What is the advertisement saying?’ rather than ‘What does it mean that the advertiser is spending money to promote his wares?’, even though we clearly use social intelligence to decode the advertising we see. An example that emphasises the significance of our interpretation of information occurred in eastern Europe under communism; when a product was advertised there, demand often went down. This was because under communism anything desirable was in short supply, so people inferred that the government would only promote something that was of such hopelessly crappy quality that people wouldn’t be willing to queue for it.
Or imagine you have two products for sale. Product A appears to offer more features than Product B, and is also offered at a lower price. To an economist, the decision is easy: with a higher utility and a lower cost, everyone should buy Product A. However, since a customer is making the decision without perfect knowledge of the two products and their reliability, they might assume that there must be a reason why the price of the ostensibly superior Product A is not higher. The most likely outcome, I suspect, would be for them to buy neither. Whatever economic logic might dictate, the manufacturer of Product A would be better off asking for a slightly higher price than the manufacturer of Product B.
This is not irrationality – it is second-order social intelligence applied to an uncertain world. By using a simple economic model with a narrow view of human motivation, the neo-liberal project has become a threat to the human imagination.
On a trip to Spain before the 2008 global financial crash, I noticed that there were truly monstrous apartment blocks being built mile after mile along the coast.* Construction at the time accounted for an insane 20 per cent of Spanish GDP. I looked at these buildings and asked a simple question. ‘Who is going to buy these crappy apartments?’ The answer was obvious: no one. Even if the entire population of northern Europe simultaneously decided to decamp to Spain, it was highly unlikely they many of them would choose to live here.
It was soon time for me to fly home; if you flew out of Madrid or Barcelona it was impossible not to notice that both airports were magnificent, but also that they were three times larger than necessary. At London Heathrow or Schiphol in Amsterdam, almost every gate is occupied by a waiting aircraft; here, there were planes at every fifth gate or so. The airports’ sheer size spoke to anyone who would listen: if people could easily borrow money for such vanity projects, something had gone badly wrong with the banking sector.
A large part of our brain is designed to consider the messy reality, rather than the neat conceptual theory, yet the use of this part of the brain is generally discouraged. If I had turned up at a meeting about banking with photographs of the substandard apartment buildings on the Spanish coast, I would have been laughed at by economic experts, who would have viewed them as ‘purely anecdotal’. Yet as The Big Short (2010) by Michael Lewis demonstrated, the people who predicted (and bet on) the failure of the global economy did exactly that – they spoke to estate agents and visited housing developments. Why do we have more faith in a theoretical mathematical model than in what we can see in front of us?
Are we bizarrely cherishing numbers or models over simple observation, because the former look more objective?
Always Remember to Scent the Soap
Over the past hundred years, huge improvements in human hygiene have resulted from better levels of sanitation and a growing urge to maintain the appearance of cleanliness, which has brought about a significant change in human behaviour.
When Downton Abbey first appeared in 2010, a British newspaper interviewed a nonagenar
ian aristocrat to ask her whether it faithfully reproduced her memories of the pre-war British country house. ‘Well there’s one thing it doesn’t tell you,’ she explained. ‘Back then, the servants literally stank.’ And in the early twentieth century, when it was proposed to install baths for the undergraduates in one Cambridge college, an elderly fellow was having none of this: ‘What do the undergraduates need baths for? The term only lasts eight weeks.’
What had caused this spectacular change in behaviour was complicated, but it was driven as much by unconscious status-seeking as by a conscious effort to improve life expectancy. Soap was sold on its ability to increase your attractiveness more than on its hygienic powers, and while it contained many chemicals that improved hygiene, it is worth remembering that it was also scented to make it attractive – supporting the unconscious promise of the advertising rather than the rational value of the product. The scent was not to make the soap effective, but to make it attractive to consumers.
If we are in denial about unconscious motivation, we forget to scent the soap. If we adopt a narrow view of human motivation, we regard any suggestion of scenting the soap as silly. But, like petals on a flower, it is the apparently pointless thing that makes the system work.
Back to the Galapagos
Because they offer competing choices, consumer markets provide a guide to our unconscious in a way that theories don’t. For this reason, I have called consumer capitalism ‘the Galapagos Islands for understanding human motivation’; like the beaks of finches, the anomalies are small-but-revealing.
Just as dog breeders and pigeon fanciers understood the principles of natural selection before Darwin codified them, many people involved in selling things have an instinctive grasp of the difference between what people say and what they do. When he won a MacArthur Foundation fellowship in 1984, Amos Tversky said of his work as a cognitive psychologist, ‘What we do is take what is already instinctively known by used-car salesmen and advertising executives, and we examine them in a scientific way.’
We do not have a similar mechanism for politics, or for areas where there is no mechanism for distinguishing unconscious feelings from post-rationalised beliefs. To me, this is the greatest cause for optimism: if we can honestly acknowledge the gulf between our unconscious emotional motivations and our post-rationalisations, many political disagreements may be easier to solve. Again, we simply need to learn to scent the soap.
It has become fashionable to discuss an approach to welfare called Universal Basic Income (UBI). The idea, which has been tested in Finland and a few other places, is to replace welfare programmes with a single minimum income, paid to everybody in the country over a certain age. It would be enough to take care of most people’s basic needs; food, heating and housing would be paid for partly by the elimination of other forms of welfare provision but also by higher taxation on higher earners. Whether or not UBI is economically feasible,* it is interesting as a thought experiment – partly because it is surprisingly popular with people on the political right as well as on the left. Milton Friedman supported the idea, as did Richard Nixon. My own grandfather, a man of robust right-wing views, also believed that this is how welfare should work.
People on the political right will normally argue against the redistribution of wealth, so what is going on here? Perhaps protests against wealth redistribution are essentially, like most political opinions, merely an attempt to add a rational veneer to an emotional predisposition. People on the right instinctively dislike most welfare programmes, but UBI is paid equally and indiscriminately to all, which means there is no incentive for claimants to exaggerate their own misfortunes in order to benefit. UBI also preserves differential incentives to work: if one man lies in bed all day and his neighbour goes out to a job every morning, the worker will be richer than the layabout in proportion to his effort. Finally, UBI does not allow the ruling political party to bribe its own supporters at the expense of people who don’t vote for it.
UBI is an example of a political thought experiment involving ‘scenting the soap’, in other words lending unconscious emotional appeal to a rational behaviour by changing not what it is but how it feels. How many more unexpected areas of agreement might we find if we were prepared to experiment with the presentation of policies, rather than describing them in narrow functionalist terms? If we spent just 20 per cent of the time we spend preparing economic models on a healthy search for psycho-logical ones, how many more insights might we uncover? Does better psychology, as Robert Trivers wrote, have the potential to uncover and solve some of the deeper roots of our unhappiness?
A few years ago I met Daniel Kahneman for the first time. He was characteristically pessimistic about the prospects of behavioural science to change human decision-making, believing that our biases are just too deeply embedded. However, he was hopeful that people, even if they couldn’t see the biases in themselves, might use behavioural science to better understand the behaviour of others. This book has been written in that same spirit. I’m not asking people to completely overhaul all decision-making, to ignore data or to reject facts. But, whether in the bar or the boardroom, I would like just 20 per cent of conversational time to be reserved for the consideration of alternative explanations, acknowledging the possibility that the real ‘why’ differs from the official ‘why’, and that our evolved rationality is very different from the economic idea of rationality.
If we could resist the urge to be logical just some of the time, and devote that time instead to the pursuit of alchemy, what might we discover?
Quite a lot of lead, I suspect. But a surprising amount of gold.
Endnotes
‘As the psychologist Jonathan Haidt has shown . . .’, Jonathan Haidt, The Righteous Mind (2012).
‘A recent article in Harvard Business Review . . .’, S.K. Johnson, ‘If There’s Only One Woman in Your Candidate Pool, There’s Statistically No Chance She’ll Be Hired’, Harvard Business Review (April 2016).
‘That’s all there is to it.’, https://www.farnamstreetblog.com/2009/12/mental-model-scientifc-method.
‘In the foreword to a WPP annual report . . .’, ‘You May Not Know Where You’re Going Until You’ve Got There’, WPP Annual Report (2014).
‘. . . or instruction needed.”, Don Norman, The Design of Everyday Things (1988).
‘In the word of Jonathan Haidt . . .’ The Righteous Mind (2012).
‘. . . offered a possible evolutionary explanation.’, Colin Barras, ‘Evolution could explain the placebo effect’, New Scientist (6 September 2012).
‘. . . and more by our perception of it’, ‘The Vodka-Red-Bull Placebo Effect’, Atlantic (8 June 2017).
‘. . . the father of ‘Nudge Theory’, Richard Thaler’ Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness (2008).
‘. . . often outdone by the taste of the latter’.’, Lucas Derks and Jaap Hollander, Essenties van NLP (1996).
‘. . . for leather car seats than for books on tape.”, Daniel Kahneman, ‘Focusing Illusion’, Edge (2011).
About the Author
RORY SUTHERLAND is vice chairman of Ogilvy. A columnist for The Spectator, he is former president of the Institute of Practitioners in Advertising, the professional body for advertising, media, and marketing communications agencies in the United Kingdom. His TED Talks have been viewed more than 6.5 million times. He lives in London.
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Copyright
ALCHEMY. Copyright © 2019 by Rory Sutherland. All rights reserved under International and Pan-American Copyright Conventions. By payment of the required fees, you have been granted the nonexclusive, nontransferable right to access and read the text of this e-book on-screen. No part of this text may be reproduced, transmitted, downloaded, decompiled, reverse-engineered, or stored in or introduced into any information storage and retrieval system, in any form or by any means, whether electronic or mechanical, n
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Cover design by Alex Merto
Published as Alchemy: The Surprising Power of Ideas that Don’t Make Sense in the U.K. by WH Allen, 2019.
First William Morrow hardcover published 2019.
FIRST U.S. EDITION
Digital Edition MAY 2019 ISBN: 978-0-06-238843-8
Version 04102019
Print ISBN: 978-0-06-238841-4
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