Peter Ubel on Customer Irrationality and Market Failure

Peter UbelJoin Professor Peter Ubel as he presents “Consumer irrationality and market failure: What are our duties, as business leaders and citizens, to protect people from their own worst instincts?”

We will discuss:

  • When savvy understanding of consumer behavior slips over into exploitation
  • The increasing use of behavioral economic insights in the development of regulations to protect consumers
  • What the worldwide obesity epidemic tells us about rationality, free will, and the limits of free markets to promote people’s best interests

Professor Ubel’s session took place in June 2012.

View Professor Ubel’s Bio (PDF)

 

 

Pre-recorded Video

 

Live Session Recording

Comments
8 Responses to “Peter Ubel on Customer Irrationality and Market Failure”
  1. Sheldon Gulinson says:

    Your presentation was very interesting. Thank you!

    As you intimated, obesity is a big problem, not only because it leads to illness, and to progression to more serious illness once an obese individual becomes a diabetic or has other obesity-related chronic diseases. That then leads to expensive consumption of healthcre resources, and, of course, lower productivity and often a shorter life.

    While you present an interesting case about the means by which government can be most effective in playing its part in preventing or eliminating obesity, aren’t there other vehicles that are likely to be more effective, either in lieu of or in addition to government efforts? If so, what are they as this issue (obesity) will become increasingly important as we wrestle with the fact it is growing, it contributes to unreasonable increases in healthcare costs, and as we shift to providers (doctors and hospitals) assuming risk/responsibility for management of the health of a given population? For example, it doesn’ appear that the usual doctor’s admonition that, “you need to lose 20 pounds” works. So, if that doesn’t work, what will?

  2. Dina Dunn says:

    Peter – thanks so much for the great lecture and all the good work you’re doing.

    I was hoping you might comment on the role poverty plays in predicting food choice and purchasing behavior. When a family on an extremely tight budget can buy four ‘Extra Value Meals’ at McDonald’s for less than a grocery basket of fresh fruits, vegetables and grains, it could be argued that this market segment has their decision making power taken away. No amount of information or education can get them to make healthier choices because they can’t afford the items which are healthiest for them.

    Can you talk about the interplay between poverty, obesity and food choice / purchasing behavior?

    • Paul McGregor says:

      One factor in childhood obesity is that children can be picky eaters and there is a tendency to give in and let them choose unhealthy foods when shopping. One of my granddaughters likes to ask her father for “an unhealthy snack.”

  3. Interesting presentation, although I think some of the so-called studies don’t really replicate how real-life markets and consumers actually function/make choices (e.g. toddlers behavior during a snack break cannot be extrapolated to family /adult social meal time behavior).

    As a 15+ veteran food marketer (and Fuqua grad) who has now become an advocate for healthier, real food in the face of alarming obesity rates, I am in complete agreement that the market has failed on many fronts. Most of these failures, however, can be tracked back to industry efforts to make more money by selling low nutrition, how profit foods via deceptive marketing efforts and misleading claims/labels. While it is all legal (thanks to much lobbying by Big Food/Ag/Beverage companies), that hardly makes it a fair marketplace. The very underlying assumption in microeconomic models of perfect competition is “perfect information.” With poor transparency and outright misleading / dishonest information, the Food Industry has created an imbalanced marketplace that is stacked in their favor and shifts inordinate externalities to society and internalities to consumers.

    I look forward to participating in the conversation, time permitting.

  4. Thank you for your presentation, Professor Ubel.

    I was wondering how we can integrate the need for healthier lifestyles into this debate/discussion. I believe the global obesity epidemic also reflects more sedentary lifestyles, especially among our young who can sit for hours playing video games, texting and watching tv.

    As leaders of consequence for our families as well as society as a whole, what duty do we also have to protect people (ourselves?) from their instinct to remain immobile for hours while engaging in the latest technology? How do we provide the information consumers need to make intelligent decisions regarding their ‘seated activities’ vs their ‘mobile activities’ for greater health? eg. Prepare impact studies on weight gain caused by hours sitting in front of computers, tv’s and using phones or possibly provide succinct calorie burning charts reflecting active vs inactive functions.

    After we provide the information, what other ways can we lead ourselves and others to a better future? Promote physical education in schools and at work? Provide more safe walking areas in towns and housing developments? Reward consumers for weight loss with discounted insurance rates for verifiable results?

    I look forward to a lively discussion.

  5. Thanks Peter for an informative and educational lecture. Obesity, it appears to me, is a social disease and a number of factors including poverty (making poor food choices because they are “cheap”), ignorance, and acceptance of unhealthy behaviors.

    I agree that many would avoid the food that has a costly surcharge added while healthier alternatives are sold at a discount. I presume that if the Government would to do this, that it will subsidize the healthy menu with the sin tax collected. Does this work in the case of Tobacco or alcohol? Is this money set aside for taking care of the sick? Will the money be used to take care of those who suffer the consequences of Tobacco and alcohol, or would it go to general health fund for all?

    There appears to be a competition even for unhealthy items for the presumed short time “happiness”. How does this differ from the healthy competition?

  6. R. Rothman says:

    Balderdash! The form of mortgage which allows consumers to make apples to apples comparison has nothing to do with a prohibition on behavior that does not harm third parties. The issue is whether there is a compelling government interest in prohibiting obeisity, or too much sodium or going out into the sun without sun blocker. The trend seems to be to allow somewhat more choice. In my state, for example, the legislature just repealed the motorcycle helmet law so motorcycle riders can feel the wind in their hair. There is obviously a government interest in avoiding motorcycle accidents because society may have to pay for the results. However, the political decision was that that interest was not as compelling as the wind in the rider’s hair. There may be limits to a citizen’s choices that do not harm third parties (Dr. Kevorkian’s assisted suicides?), but it is well beyond big gulp sodas.

    Because choice is hard we should just let the govenment narrow down our choices? Let the government decide as long as the intention of the bureaucrats is to make the world a better place? Are you kidding? I think the government should prohibit your webinar because it raises the blood pressure of some of the listeners. :-)

Trackbacks
Check out what others are saying...
  1. [...] here to register and view the video! Share this:TwitterFacebookLike this:LikeBe the first to like [...]



Leave A Comment