Economics, Book/Article Reviews

Cinnabon, Caskets, Catfood, and the Tyranny of Experts

I had occasion recently to read some of Akerlof and Shiller’s new book Phishing for Phools. I found it, to be perfectly blunt, infuriating. The book is paternalistic. It assumes that free markets reward cheaters. It equates marketing with fraud. It engages in a score of other offenses.

But the aspect of the book that inspired my most emphatic marginalia is its contempt for the decisions made by people who are poorer and from a lower social class than the authors.

For example, the popular airport chain Cinnabon comes in for a lot of critique in the book for using the appealing smell of fresh cinnamon rolls to appeal to consumers’ appetites, while occluding the nefarious truths that a “Cinnabon is made with margarine; it has 880 calories; and it is slathered with frosting.”

Unsurprisingly, the bakery at Whole Foods isn’t mentioned.

Akerlof and Shiller also enjoy reminding us that “even if we are careful 99 percent of the time, the remaining 1 percent, when we act as if ‘money does not matter’ can undo all that prior rectitude.” And they have nothing but contempt for the businesses that are “keenly aware of those 1 percent moments.” These businesses, which they say often focus on rites of passage like weddings and funerals, “target” consumers ‘when love (or other motivations) trump our budgetary caution.’

One of their primary examples of this is the funeral business.

The parlor director carefully lays out the caskets to induce the choice, for example, of the Monaco ‘with Sea Mist polished finish, interior richly lined in 600 Aqua Supreme velvet, magnificently quilted and shirred.’

Their contempt for consumers who would be tempted by such a object, and for businesses that would provide it, is evident in every adjective. They don’t want that kind of funeral for themselves or for their loved ones. It’s overdone. It’s a waste of money. It’s…tacky.

But Akerlof and Shiller’s opinon of that funeral shouldn’t count for much if they aren’t the ones planning the funeral.

Back in 1913, Maude Pember Reeves took on exactly this same topic in her book Round About a Pound A Week, which looked at the living expenses of London’s working poor. She devotes an entire chapter, called “Thrift,” to the then-common and often-disparaged practice among the working poor of purchasing funeral insurance–for up to 10% of the whole household budget. She notes:

One of the criticisms levelled at these respectable, hard working, independent people is that they do like to squander money on funerals. It is a view held by everyone who does not know the real circumstances. …[The working poor] are likely to lose one or more of their children. The poorer they are, the more likely are they to lose them…the pauper funeral is wanting in dignity and in respect to their dead.

Pember Reeves then gives, in heart-breaking detail, the budgets used by families for the burial of their children. Generally, they seem to spend about two weeks salary. Is this extravagance? Who gets to decide?

Who are Akerlof and Shiller to say that the Monaco Casket is too much?

And yet they say it. And Pember Reeves reminds us that puritanical busy bodies have been saying the same thing for well over a century:

Experience shows how fatally easy it is for people to label all poverty as the result of drink, extravagance, or laziness. It is done every day in the year by writers and speakers and preachers, as well as by hundreds of well-meaning folks with uneasy consciences. They see, or most often hear of, people whose economy is different from their own. Without trying to find out whether their own ideas of economy are practicable for the people in question, they dismiss their poverty as ‘the result of extravagance’….Or they see or hear something which seems to them bad management. It may be, not good management, but the only management under the circumstances. But as the circumstances are unknown, the description serves, and middle class minds, only too anxious to be set at rest, are set at rest.

Towards the end of their book, Akerlof and Shiller tell the story of Shiller’s being caught by his own susceptibility to marketing. He was persuaded to buy gourmet cat food for his cat. Wondering if the advertised deliciousness of the cat food was accurate, Shiller tasted it and was horrified to discover it was gross. He takes this as proof that businesses depend on “shrouded attributes” to make money.

Akerlof and Shiller do note that this test was not definitive. “If only Lightning could have spoken, we could really know” if the cat food was any good or not. Lightning of course, is perfectly capable of indicating a preference. All Akerlof and Shiller needed to do was to offer her a choice between two dishes of cat food.

But they don’t want to do that. Because she might choose the one they don’t approve of.

And if they don’t recognize that even a cat can express preferences that might not replicate their own, why would they recognize that other people may as well?

  • Jerome Bigge

    If the price of filet mignon was the same as hamburger, which would you pick? Price is a means by which we can decide for ourselves what we value the most.

    • Jon Hutto

      That’s crazy talk. We need a committee of people who are corrupt to set prices for all things.

      • Sean II

        Not only that, we need a party campaign designed to reforge our lost link between the cinnabon reward and the dignity of labor.

        Put another way: one should only be able to get ya some, some, some of that cinn-a-bon, if one is truly willing to Work It.

        There is no other way.

  • CbyN

    I share the disgust for the nanny state, but one distinction should be made. I’m a lot more interested, much more than I ever would otherwise want to be, in what the poor are buying when it’s courtesy of the tax payer.

    ETA: Not just the poor obviously. Sven’s romping around in his new Tesla using tax credits doesn’t sit well with me either.

    • Roger Koppl

      You should worry more about corporate welfare than poor relief, CbyN.

      • CbyN

        If we’re discussing our prioritizing of concerns of how government welfare is distributed, then sure, but that’s not the point of the OP.

        When the government gets involved in distributing benefits, be they poor or corporate or middle class, those paying those benefits become a lot more morally engaged as to how those benefits are being enjoyed.

        • Chi_R

          So you’re disgusted by the nanny state, unless you get to take part in it?

          • CbyN

            Amazing how you get that from anything I wrote.

            I don’t like the nanny state because it puts people into the position of being moral busy bodies. Call me crazy, but when I’m compelled to give money to the poor, or the rich, or the unions, or the oil company, or whomever else I have to list here to signal that I’m against government welfare, I start getting a lot more curious as to how that money is being used.

          • Chi_R

            Mostly because you’re saying you don’t think that people should be moral busy bodies, unless they should be moral busy bodies justified by reason X that you agree with.

          • CbyN

            No. They’re not mutually exclusive. I don’t want X because it leads me to do Y.

            Or do you let your toilet overflow because cleaning it up is disgusting?

          • Chi_R

            It would be mutually inclusive, in that you can’t have you curiosity satisfied without having a nanny state to provide it.

            And in turn, that same nanny state would be using what I’m compelled to give to satisfy your curiosity, since it would take time and resources to gather the information to provide to you.

            So you’d be using my money to receive a benefit, so by your logic then I’m morally engaged to find out what you’d do with that benefit.

            However, I have better things to do with my time, like cleaning my toilet.

          • CbyN

            Nonsense. Do you even know what point you’re trying to make, or are you just looking for a good time honey?

            Of course I can have my “curiosity satisfied” (whatever that means in your post) without the nanny state. Or should I be giving proper attribution to the state for allowing me to sit and ponder its distribution schemes?

            Good luck with your toilet.

          • Libertymike

            There is a cost associated with monitoring how the poor peeps spend their welfare money.

            Usually, if not always, the monitoring costs themselves become a source of abuse, bloat, corruption, and further misallocation of resources.

          • CbyN

            All well and good (well, bad considering the bloat and corruption), but besides my point. Monitoring is first and foremost for measuring effectiveness, and it need not occur on the public dollar (c.f NGOs).

            If congress passes a bill allocating $100B for spa treatments, or light bulbs, or Teslas, or airports in the middle of nowhere, or missile shields, or studies of why internet comments tend to be on the cranky side, I don’t need to pay someone to monitor this allocation. I can simply opine that this is an improper allocation of tax dollars.

          • Libertymike

            Of course, not all monitoring costs are, or need be, necessarily borne by you, me and Dupree.

            Unfortunately, the taxpayers are on the hook for too much of the assessment and monitoring of welfare programs, particularly for the poor.

            How about some anecdotal evidence? A law school friend, scion of a fairly prominent democrat family, “worked” for the welfare fraud unit investigating and monitoring welfare recipients. It was almost a no-show job. He would say he “worked” 20 hours when he might have worked 5 hours in a given week. This was in the late 80s and he was paid $30.00 an hour. He would unabashedly brag about the arrangement.

    • Joshua Holmes

      I hope you’re just as interested in the purchases of government employees, senior citizens, defense contractors, and big bank employees.

    • Jack Blue

      Interesting comment. But I suppose the rich get as much in benefit payments, if not more, than the poor. This idea of benefit scroungers is very clever because it stigmatises one catagory of benefit seekers, the poor, and promotes a differnt benefit scrounger, the rich. The rich live and get richer by handouts from the state-tax relief etc-. How do you think the rich get rich and stay rich? This is how it works. A goverment get into office, uses tax-payer money to pay consultants £Billions for 2 hours work and then get themselves and
      their families jobs after they leave office. It’s a kind of socialism for the rich, the state basically funds these big companies, it gives them money. How else do you think these big financial firms get so big, they are in reciept of benefits from the state. The real benefit street is the City and the financial districts and the real benefit scroungers are big business.

      • Libertymike

        Tax-relief is not a handout as a reduction in tax is not a subsidy.

  • Roger Koppl

    Holy explicative, Batman! This is reeeeaaally good commentary on their inphuriating screed, Sarah. Thanks very much for that.

    • Roger Koppl

      Meant to say “expletive,” but “explicative” works even better! Unintended consequences of typos.

  • JW Ogden

    Great post.

    I am shocked at what people spend on their pets these days. I am shocked that gourmet cat food exists and health insurance for pets! I have no problem with Cinnabon. So evidently Shiller would not like to have me decide for him. In the end who am I to judge.

  • David

    Leave Cinnabon alone! I eat, on average, less than one Cinnabon per year. It is one of my favorite foods nonetheless. I would have thought a Cinnabon contained even more than 880 calories, though I’ve never bothered to research it because–imagine this–I already know it’s incredibly unhealthy. I eat Cinnabons occasionally because they are delicious. Shame on those people who want to take away my ability to choose delicious, unhealthy snacks.

    • JW Ogden

      it’s incredibly unhealthy

      Do you have any scientific proof of that? My research does not show that it is unhealthy.

      • David

        I’m not sure what you’re getting at. Have you embarked on some sort of Cinnabon diet that’s yielding positive results?

        • JW Ogden

          I am on a sfogliatelle diet but it is pretty close.

  • RobertB

    It certainly is hilarious to imagine Shiller eating a big spoonful of catfood to determine whether or not it tastes good to cats.

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  • Jack Blue

    Very interesting. But the free market does reward cheaters, in fact every economic and social system does. The law is there to keep the masses at bay, and promote the few who are clever enough to find a way around things. For most succesful people, it is in spending time pre-empting the law, finding it’s loopholes, that they invest, not by engaging with it or even cheating.

  • “Cinnabon is made with margarine; it has 880 calories; and it is slathered with frosting.”

    I’m outraged that through all the years I’ve been eating Cinnabon they’ve never informed me that their rolls are slathered in frosting.

  • Christopher Ritchie

    I feel like there is an excluded middle here. In general, you should be suspect of people judging ‘the poor’ on the basis of their habits. The reason for that is how historically that ‘judgement’ has been used to justify policies towards controlling the poor that often end up hardly being for the benefit of those people.

    That being said however, the idea that no behavoir by individual or company should be criticized as being potentially ‘bad’, that all economic choices are fine because they’re yours, is equally suspect and a bit silly. A Fourteen year old prostituting themselves to feed a never-ending crack habbit until they die at twenty is a set of economic decisions, and yet do we stand by and shrug saying ‘Well it’s their own choices so… good?’. Is no choice anyone makes ever to be subject to judgement?

    People make choices for hosts of reasons; sometimes those reasons are bad and observably so. Sometimes people themselves generally recognize that that choice is bad but might not in a specific narrow circumstance. People are irrational, emotional, subject to manipulation and coercion on numerous levels. Otherwise advertisers would be out of a job.

    • CJColucci

      It is extremely unlikely that I am the best judge of my own interests, even as I myself conceive them. I can cite many examples from my own life as all of you can from yours. Nevertheless, it is irksome to be reminded of this fact, and to be prevented, by laws, incentives, or hectoring from doing what I will eventually regret, so there must be some limits to people who, in fact, know better than I what I ought to be doing if I am thinking clearly about what I want trying to get me to do it. But I see the question as a shifting balance between how irksome, how coercive, and how beneficial the proposed intervention is, not a matter of first principle.

    • genemarsh

      When the fight is between Nannies and Drug Dealers, why take sides?

    • Les Kyle Nearhood

      In the case of a fourteen year old, there is a compelling public interest for authorities to step in because of the minor status. In an adult, there is no compelling public interest, yes even if they kill themselves, Why? for the simple reason that it will (and already has) abound to a proliferation of rules and busybodies trying to decide everything about what anyone does.

  • Alsadius

    Wait, did they actually cite a cinnamon bun being slathered in frosting as a bad thing?

    Forget whether they’re paternalistic. Are these people even human?

    • Les Kyle Nearhood

      that was my view.

  • Aajaxx

    This review sounds like an apologetic for people who make a living off people’s weak will and irresponsibility. I’m all for the freedom of the marketers and consumers to engage in immature behavior, but I’m not buying the excuses.

  • prasad

    It’s the same with food taxes – fat taxes are proposed for the disgusting sodas poor and fat people enjoy, never for the virtuous calories contained in our yummy and completely non-disgusting smoothies and artisanal beers.

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  • John Louis Lassen Perry

    One thing that Akerlof and Shiller have talked about in the past with respect to free markets is the 19th century “patent medicine” industry. When I worked in archaeology a few years back, I was shocked at the pervasiveness of many of these products in Californian trash pits. Manufacturers made huge fortunes. Most of these potions were harmless, although if you used them in place of seeing a doctor, you likely became addicted to the tincture of opium most of them contained. Some were actually poisonous, one even contained a radioactive substance, though they were mild enough that death might take months or even a few years. They were expensive, medically useless, and sometimes deadly. It was partly activism against the worse ones that lead to the Food and Drug Administration. Was it a good thing or a bad thing to stop people, who often had no understanding of the effects of this stuff, or who were even illiterate, to stop themselves from committing slow suicide by consuming this stuff, or would it just have been better for them to have been unwitting victims of the free market in medicines?