I chanced upon a stall that sells chicken rice for $2 and saw many people queueing for it. Knowing what to expect but curious, I went to purchase them for lunch. Not too far away from the stall, there is another chicken rice stall that sells for $4.
The $2 chicken rice was packed with lots of rice and 3 thin piece of the chicken. Not that I am complaining, but I ended up finishing the chicken with my rice still more than half left.
Here, I am not going to talk about the capacity to eat nor greed versus need.
What I am going to talk about in this story is the concept that has been used by many marketing experts out there that take advantage of humane’s predictably irrational mind.
Based on the book Predictably Irrational by Dan Ariely, human nature tends to define value on a relative basis rather than absolute basis when it comes to purchasing. Take the chicken rice example I mentioned, the $4 chicken rice would have given more than double the meat the $2 chicken rice meal had offered. But people choose to purchase the one with the lower cost instead, buying multiple packets since it was more affordable.
Take another example for instance, you go to a restaurant by the Collyer Quay and had this in their menu:
Wagyu Beef with salted peas and mashed potatoes – $48
Chicken Rice Speciality – $12
All of a sudden, the chicken rice become such affordable to you. I know some are probably going to argue the intangible such as service and ambience but how many times are you caught with such situation and still choose to do so. The book leverage on compelling human mind explanations to show that a highly effective technique to pricing is to put another product at a higher price next to it. This plays around our mind the sense of relative value.
Perhaps this is why many Singaporeans are one unhappy bunch despite earnings multiple times the income of the neighbouring countries. Look left, look right, how to be happy with $100k/annum when your neighbour is earning $150k/annum.
This should remind us about a quote from Theodore Roosevelt:
“Comparison is the Thief of an Ultimate Joy”
Being rich in life is not about looking left or right, look at your own hands and self in the mirror, that’s happiness.