Monday, October 31, 2005

Social Learning

Sebastian Mallaby in the Post writes a column, Do Seniors Need Saving?, that raises many questions. The theme is that with globalization and longer lives, and the decline of pensions (see NYT magazine) people should be saving more now, but instead they're saving less.

He addresses a liberal strawman--that the "hidden persuaders" of the 1950's are making people spend more and save less:
"But people managed to save back in the 1950s, so they could also save today. Indeed, the hidden persuaders are surely less insidious now than they were then: People have gotten better at zoning out their messages."
I think it's true that societies learn. Supposedly that's the case for crack: people, particularly young people, in the inner cities saw the ravages of the crack epidemic of the 1980's and decided not to use it. A similar explanation may have been offered for the decline in teenage pregnancies, crime, etc.

But another way to look at this is as an arms race between consumers and commerce, with each side searching for advantage. Advertising has been around for centuries, getting more sophisticated all the time. Consumers have been around for a while, also getting more sophisticated all the time. Unfortunately Mr. Mallaby is a whippersnapper, with no personal memory of the 40's and 50's. There's more and more choice of products, more and more personalized advertising, more and more product placement. For example, I don't remember any vending machines in my high school, nor do I remember Disney doing a lot of product tie-ins when Cinderella was released.

My bottom line: in a race between people who have a direct and immediate financial incentive [to sell] and those whose incentive [to save by not consuming]is more diffuse and more delayed, I'd place my bets on the first.

Postscript: Thomas Schelling, whom I seem to cite repeatedly these days, did work on the idea of two people in one skin--the one who craves immediate gratification versus the one who plans and saves. Rereading that work would be interesting.

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