For many years I have heard complaints that the life of consumer goods, in particular appliances such as washing machines, and refrigerators, is getting shorter and shorter. A typical complaint goes that a refrigerator bought 30 years ago likely still functions, but a modern refrigerator lasts at most 6-7 years before breaking down. Typically, the market is blamed for this (i.e. manufacturers create faulty products so that when they break down they get new orders). That means that they intentionally work against the interests of the consumer. While the observations of consumers correspond with reality, their explanation of this phenomenon is wrong. I want to stress that the producers of consumer appliances are unjustly blamed.
To make the problem clearer, let me explain what exactly makes a certain market tick (i.e. what makes manufacturers produce the particular goods we buy in stores, and not others). A common misconception, which has somehow become the conventional wisdom, is that the market should produce what is “best” for us. That suggests that consumer goods should constantly get more durable, and of higher quality, and that they should affect us positively.
The problem with this perspective is that it does not correspond with reality. As an example, the market economy produces cigarettes, which have been known for many years to be deleterious to our health. There are many such examples: alcohol, drugs, etc. And newer drugs often have a stronger effect, which often means that they harm us more.
A typical market economy also produces many low quality goods, which are in demand. Have you ever bought something that broke after the first use? To claim that the market always produces “the best and the most useful” contradicts common sense and reality. In reality the market produces whatever consumers are willing to pay for, and it tries to do this as efficiently as possible. Here one should ask the questions, “What exactly do consumers want?” and “What do they pay for?” These two questions are of utmost importance, because these are the questions that producers ask themselves before they decide whether or not to produce a particular good.
The most straightforward way for a producer to determine what people want is to conduct a survey. However, the problem with surveys is that they often do not reflect the real needs of people. For example, many years ago car-manufacturers realized that when they ask people what kind of car they want, people say they want inexpensive, fuel efficient cars that are easy to maintain. However, when consumers are given a real choice between cars right in front of them the results are significantly different. It turns out that people actually choose cars based on the outside appearance, cars that are sporty, and have a long profile. Manufacturers found that there is a big difference between what people claim to want and what they will actually buy. People often delude themselves about what they actually prefer.
In sex-related surveys it has been shown that participants often consciously lie. As an example, typical surveys show that heterosexual men have more sexual partners on average than heterosexual women. That is impossible, but that’s what surveys show because people consciously lie.
As another example, people often enter a shop and buy something that is on display, even though they did not intend to buy it beforehand. How could they accurately respond to a survey if they did not know what they would buy in advance? The decision to buy is often impulsive.
It is ultimately impossible to determine exactly what consumers want from surveys. What is left is for producers to see what consumers will pay for, and then guess what else they would buy if it existed. To achieve this producers try to understand how consumers evaluate goods (i.e. what value one assigns to particular qualities). They base that determination on previous buying habits.
So, how exactly do consumers decide to buy something? Assume for instance that you want to buy a washing machine. A washing machine has many parameters: price, functionality, color, load size, durability, etc. When consumers go into a store they have to evaluate all these qualities, and more, to choose the washing machine that best satisfies their needs. That task is not always easy, but what typically happens is consumers prioritize and outward appearance over durability. That is to say consumers are more likely to buy a cheap, good-looking washing machine than one with a 10-year life expectancy. The consequence of this is that manufacturers who pay attention to what people actually buy, and not what people say, will try to produce a washing machine that is cheap and attractive, but not necessarily long lasting.
Taking that into consideration, it’s obvious why consumer appliances have such a short life. In reality consumers get what they are willing to pay for, not what they say they want. When somebody buys a microwave, and it breaks down after two years, they honestly didn’t expect that to happen, but they actually got exactly what they paid for.
Is it the manufacturer’s fault that consumers delude themselves about their priorities? How can producers guess what people really want when people’s buying habits and their stated intentions are different?
In conclusion, what consumers think they want and what they’ll actually pay for are two often very different things. It’s foolish to complain when consumer appliances reflect our buying habits and not our expectations. When people search for scapegoats they should take a good look in the mirror. My advice is, when you make an important purchase do your due diligence. It is hard, but it is always worth the time.
Tags: planned obsolescence