This chapter is entitled "The Truth About Relativity." Ariely talks about coming across an add for The Economist magazine. The add gave 3 options for a subscription: 1. One year's online access to articles for $59.99. 2. One year's print subscription for $125. Or, 3. One years print subscription and online access for $125.
Which one would you choose? Ariely did an experiment with his students to find out which one they'd choose, and 16% chose the first option (online access), 0% chose the print only option, and 84% chose the print and online option. But what if you changed the choices and removed the middle option. Would the results change? You wouldn't think so because no one chose the middle option anyway. But it did! When the only 2 options were 1. One years's online access for $59.99 or 2. One year's subscription and online access for $125, 68% chose the first option (up from 16%), and only 32% chose the second option (down from 84%). So what happened?
Ariely calls it the principle of relativity. He says in the original add, the middle option was a decoy that forced your brain to desire the third option rather than the first, even though the first option was clearly the better choice. The reason is, first, we always think of things in terms of a thing's value relative to another thing's value. We don't have an internal value meter that telss us how much stuff is worth-- we have to guestimate based on the value of other things. Second, we tend to compare things that are easily comparable.
So if you're choosing between three cars, one's an SUV at $10,000, one's a truck at $15,000, and one's a truck at $15,000 that has 15,000 fewer miles than the other truck, most likely you will choose the truck with the fewer miles and not the SUV. The reason is, you make your choices based on comparisons not absolute values, and it's much easier to compare things that are similar than different.
Ariely says that this is a primary reason for out of control spending and crazy consumerism and materialism. We are constantly comparing ourselves! And if we run in circles with people with fancy stuff, most likely, we will start making purchases based on our comparison with other people's fancy stuff and not on what we need. It's interesting to think about the stuff I own that I might have purchased more out of comparison than need. How much have I tried to one-up someone. How much have I determined values of things based on what someone else has?