Rory Sutherland on Behavioural Economics, Marketing, and the Psychology of Value

Rory Sutherland

The whole question of the decision sciences is, I think, completely critical at the moment, and it's going to get very interesting with AI. I keep hearing people say you'll tell your AI, 'Find me a skiing holiday,' and it will provide you with the perfect skiing holiday. And I keep saying: people don't decide like that. At the very least you'll have to show them three or four or five skiing holidays from which they choose, because we can't really choose in the absence of comparison. It's a slightly freakish element of free-market capitalism — we can only like something if we choose it in preference to something else.

Rory Sutherland

Well, among real estate agents there's apparently a bit of a trick. Before they show you the house they actually want to sell you, they show you a less appropriate house — ideally one that's slightly more expensive. So that when you see the house they want to sell you, the decision is now clear-cut: 'Ooh, it's a bit cheaper than the other one, and it's got a conservatory.' It's a decoy effect, a bit like the famous economics experiment. One of my interesting questions is what interface AI will deploy to help us make choices, and whether it will make the mistake you could very easily make. Think about it: nobody clicks the 'I'm feeling lucky' button on Google. It's been there for years. They found removing it slightly reduces the appeal, but the number of people who actually click it — take me straight to a single page — is vanishingly small. People want to choose between options above the fold. It's very easy for people with an economic or tech background to assume they know what people are trying to do, that we're all utility maximisers, and to be completely wrong.

Rory Sutherland

We usually do. When you pursue efficiency, you start looking at numerical or mechanical factors, and in the process you disregard psychological factors, where the greater gains may be found. So you focus too heavily on cost reduction and too little on value creation. One of the greatest forms of efficiency, by the way, is employing a human being who's really, really nice. That's complete anathema to people in tech, who love to define business processes so as to make them susceptible to automation. Person X does this; we'll take that function and replace it with algorithm Y. It's a beguiling message, because it usually comes with cost savings attached. You might have heard of my thing, the Doorman fallacy.

Rory Sutherland

You have a five-star hotel with a doorman who welcomes incoming guests. A combination of, say, McKinsey or Accenture and a tech firm comes in and says: your doorman costs you $40,000 a year; we've defined his function as opening the door; we'll replace him with an automatic door-opening mechanism and an infrared human detector, and save you $30,000 or $40,000 a year. They walk away, take the credit for the cost-saving. Two years later the hotel's a catastrophe. The rack rate's fallen off a cliff, because the doorman was doing multiple things, many of them human and tacit. Security — there are no vagrants sleeping in the doorway. Hailing taxis, dealing with luggage, recognising regular guests, providing status to the hotel. There are loads of value-creation components that aren't captured in the 'open the door' definition.

Rory Sutherland

Correct. Management consultants often come in on a gain-share agreement — a scam where they claim a percentage of the cost savings they identify in year one. As Roger Martin, your fellow Canadian and my own personal Svengali, says: any idiot can cut costs. What takes real skill is cutting cost in a way that doesn't destroy value. What isn't understood by tech nerds — and if I'm being cruel, males in general — is the extent to which, in evaluating any business or experience, the human, face-to-face component does really heavy lifting. I've got a lovely story to illustrate it. Alex Bachelor used to be marketing director of Royal Mail — similar to Canada Post or USPS. They couldn't make sense of the fact that the brand perception of Royal Mail bore no relation to service levels. There were districts where every first-class letter arrived early the following day, extraordinarily reliable, and Royal Mail wasn't held in any particular affection. There were other areas where the service was frankly a bit ropey, and people seemed to love it.

Rory Sutherland

It did, because they thought the hundreds of millions they'd invested in service-quality improvement should translate into customer satisfaction, and therefore some sort of brand voltage. Someone had a theory that was put to the test and proved absolutely right: the major determinant of whether you liked Royal Mail was whether you liked your postman. People who had an unreliable service, but whose postman did the odd favour — left things in the porch, had a chat — thought it was a brilliant organisation, regardless of the actual metrics. That's true in any service organisation. You may interact with a utility online 95% of the time, but the one or two occasions where you deal with them by telephone or face to face disproportionately affect your perception. I've argued for a long time — and I've worked in advertising for 36 years — that if I were wholly honest, probably 50% of the time I'd advise a client: take 10 to 20% of your marketing budget and spend it on upgrading the call centre. Pay the people too much. In some organisations the best call-centre people should be on six figures, because if you're good and nice, that's how much difference it makes. It more or less drowns out all the other noise. If every time you have a personal experience it's a good experience, then broadly speaking, in the human brain, that's a good organisation I can trust.

Rory Sutherland

And I realised why this probably is. We don't have much evolved experience in evaluating postal efficiency. But we have a quarter of a million, half a million years of evolved experience in deciding who to like and trust, because for most of our existence that was one of the five most important questions to get right. Do I trust this person? Will they attack me? Are they an ally or a foe? If I pay them money, will they deliver? So what we do in our brains is use our human judgment as a proxy.

Rory Sutherland

There's a story in my book, Alchemy. Imagine you're buying a second-hand car. You turn up at a nondescript house, the car's parked outside, and you look it over — whether the pedals are worn, the condition of the bodywork — and you decide you're interested in paying $5,000. You ring the doorbell, and in one version the door is answered by a female vicar. It's a tidy, clean house. At that point you probably upweight what you're prepared to pay by 20% or so. In a parallel universe, the door is answered by a guy in his underpants — someone with no shame. In that instance you devalue the car by about $1,000 or more; you may not even buy it at all. What we're doing is using 'do I trust the person selling this' as a stand-in for the question 'should I buy the car', which I don't have the technical knowledge to answer.

Rory Sutherland

It's a really interesting question we ought to study much more. The assumption of an economist is that you need to disintermediate — you don't need estate agents, you just go on Zillow or Rightmove, choose the house, get a survey, buy it. We assume it's a purely transactional exchange. But someone who's invested 15 years doing up a house probably cares what the buyer's going to do to it. My parents-in-law are fanatical gardeners. I guarantee that if you looked around their house and placed an offer while quoting Gertrude Jekyll and Sissinghurst, you could buy it for £200,000 less than if you turned up and said, 'Brilliant, we can knock down that tree and put in a helipad.' If you said, 'We can put in a go-karting track,' I don't think they'd sell it to you at any price. This is also why estate agents do their utmost to make sure that, until things are signed and sealed, the vendor never meets the buyer. If one of them doesn't like the other, they won't buy or sell. I once didn't buy a house basically because the guy was being difficult about the fridge — worth maybe 0.02% of the value of the house. But because he was being difficult about the fridge, I no longer trusted him about the house. It turned out my instinct was right: a friend went to buy the same house, got a separate land registry search done, and found that a chunk of the garden actually belonged to Network Rail.

Rory Sutherland

Richard Thaler did his most interesting work on transaction utility. The famous thought experiment: you and your best friend are lying on a hot beach, very thirsty, and a quarter of a mile down the beach there's a place selling ice-cold beer. Your friend says, 'I'm off to buy a beer — tell me the maximum you're happy to pay, and if the price falls below that, I'll buy it.' Now, the beer is going to be consumed back where you're sitting, so the ambiance of the establishment is irrelevant. In one version, the beer comes from a boutique hotel; in the other, from a run-down shack. And your readiness to pay changes — partly in accordance with what you imagine the overheads of the seller to be — even though the actual utility of the cold beer is identical in both cases. Car salesmen know this: make the transaction feel good, make them feel good as they drive out. It's Cialdini — people are more likely to buy from you if they like you, more likely to like you if they trust you and have something in common with you.

Rory Sutherland

Be careful there — I don't think it's manipulation, and we've got to be really careful. One thing is that a genuine cold-blooded psychopath might find this difficult. There's a Geoffrey Miller theory that on a first date, women will turn up a bit late or do something slightly annoying, and it's effectively a psychopath-detection test. One of the worst things that can happen to a woman is to end up in a relationship with a psychopath — you end up with an empty bank account and everything going hopelessly wrong. Kevin Dutton has written about this. There are things you can do that make it very likely psychopaths will out themselves. The perfect test might be to bribe the waiter to tip soup on them: you and I would say, 'Oh, I'm so sorry, it was my fault, I got in the way of your soup.' The psychopath will lose his rag and can't control it. Likewise, if you turn up late, there's a chance they'll snap, 'I've been sitting here on my own like an idiot for 15 minutes,' whereas we'd say, 'Oh, don't worry, I only just got here myself, the traffic's terrible.'

Rory Sutherland

In fairness, if you study social science, you probably do become a bit conscious of it. My wife occasionally gets annoyed because I'll literally apply Taleb logic to decisions. Over 36 years, holidays where I've rented a car are better than holidays where I haven't, because you have more optionality. If the hotel's a bit meh, or not in a great area, you can just get in the car and go find a beach somewhere else. We fundamentally don't fully know the value of using a personal quality as a proxy for a decision that's simply too complicated to reduce to numbers. In economic terms it's suboptimal, but if it leads to downside-variance reduction, that's what we're really trying to do. We're not trying to optimise — we're trying to reduce the risk of the downside. It's the barbell approach: first make sure you don't do anything disastrous, then try to get lucky.

Rory Sutherland

I'm a big small-airport person. Airports are schizophrenic, because the clientele is roughly a 50/50 mix: people who fly a hell of a lot and just want to get through the damn thing as fast as they can, and people who fly once a year and regard the trip to the airport as part of the holiday — they love wandering through a shopping centre looking at the Hermès outlets. So airports cater for two totally disparate groups. And you can separate them in the security line. That's why sometimes the queue for the priority lane is longer than the queue for the amateur lane — frequent business travellers still join the priority lane, on the assumption that the people in front of them are more competent. There's a George Clooney gag about that in Up in the Air. Is that irrational, if it's a reliable mechanism? In the 19th century, if you were a posh, respected estate agent, you had a lot of reputational skin in the game in the local community — both commercially and socially. A small town was, to a large extent, a prestige economy. So dealing with the posh local agent rather than some guy who claims to be cheap isn't irrational — the commission may be higher, but you're buying reputational skin in the game as insurance against being treated appallingly. Part of the role of these intermediaries is to be the person who stays behind and suffers the reputational consequences, because the vendor who's moving 300 miles away isn't reputationally vulnerable at all.

Rory Sutherland

When I say we attach very high weighting to, say, a call-centre experience versus website design, I'm not for a second suggesting website design isn't important. But some experiences are additive or subtractive, and some are multiplicative — you can multiply by zero or by ten. There's an organisation that calls this a 'brand quake'. It could be resolving a problem really well: the customer has a problem, you put real effort and intelligence into solving it, and then you ring them back to check it's been solved. I'll give you the perfect story. My father was half-Scottish, descended from long lines of Highland Scots who didn't get where they were by splashing out. When he died he had three or four Dyson devices — one on each floor to save carrying them upstairs. By any objective measure, pretty expensive vacuum cleaners. And one of the reasons he was so fanatically loyal is that Dyson — and don't underestimate the importance of this — is a privately owned company.

Rory Sutherland

Public companies — on the NASDAQ or the New York Stock Exchange — are incentivised to behave like psychopaths, because they're optimised around short-term transactional value, not long-term relationship building.

Rory Sutherland

My theory is that the primary reason for the success of these private companies is that they're effectively, unwittingly, practitioners in the customer-value movement, not the shareholder-value movement.

Rory Sutherland

Exactly that. And that approach, even in a public company, enables people to take the long-term view and actually look after their customers. There are interesting exceptions — Costco, and Enterprise, which is family-owned. In the IPA advertising effectiveness awards in the UK, my argument is that, with the exception of P&G, Diageo and Unilever, I don't think publicly traded companies can actually do marketing very well. The requirement for short-term self-justification and numbers overrides the real purpose of marketing, which is investment in long-term customer value. This is why founders outperform even when they lead public corporations — they have the same analysts, the same pressures, but they're also considering posterity. What's my legacy? Aldi, which owns Trader Joe's, is owned by two German families. One thing family firms do is look after their staff better — and when you look after your staff better, the customer notices.

Rory Sutherland

Of course he was. Family-run companies — SC Johnson, Loblaws in Canada, McCain — should almost wear a badge, a kite mark, just as you have on British products. In the advertising effectiveness awards, which only run every two years and are very rigorously judged, four of the five gold winners were McCain — your Canadian heroes — Yorkshire Tea, Specsavers, and Laithwaite's, a wine company. The fifth was Guinness, which is sort of a family company, though owned by Diageo. So we should have a kite mark that allows consumers to prefer companies that aren't listed on some stock exchange, and hence aren't controlled by the finance function, because they're more trustworthy.

Rory Sutherland

Of course — Ford falls into that definition.

Rory Sutherland

It's not advertising — it's marketing, and it's customer experience.

Rory Sutherland

Advertising is a subordinate part of marketing. Even though I've worked in advertising for 36 years, I still aspire — probably unsuccessfully — to be a marketer, not an advertising person. Advertising is a useful toolkit available to the marketer, and generally pretty effective, but Peter Drucker said the purpose of business is to find and keep a customer profitably. That's the purpose of marketing: to create or find customers with whom, over time, you can engage in mutually advantageous relationships to mutual profit.

Rory Sutherland

Someone who worked at Dyson for 12 years told me this. He was in a presentation, James Dyson presiding, and they were presenting the call-centre efficiency statistics — average call time, average wait time, the standard metrics about how quickly you can get people off the phone. I'm absolutely fanatical about call centres, because I'm terrified that in an AI age people will try to automate them entirely. What you should do instead is make them slightly smaller but a lot better. You can't substitute the human in cases of unusual problems, special circumstances, or empathy. Don't get me wrong — I think you can get AI empathy. But at some point it's the equivalent of 'I want to speak to the manager.' There will be situations where you want to speak to a person who understands your specific situation and has the power to intervene, to override the normal rules because it's common-sensical to do so. Your call centre is also the only way you find out the problems people can't solve anywhere else. There was a smart person at Microsoft who put the call centre in the middle of the development team. I'd argue the call centre of British Airways should be on the same floor as the boardroom, because it's where you find out where you're going wrong with your existing customers — who are the most important people.

Rory Sutherland

You've said exactly the same thing Dan Davies did: one huge advantage of being a customer-value company, not a shareholder-value company, is that customers live in the real world, so you're actually rooted in reality. Shareholders — not share owners, but the shareholders — are principally interested in justifying their own existence to their investors, dealing with a highly artificial construct. The shareholder-value movement is totally incoherent, because over what time frame, and for which shareholder, are you optimising? It's a very friendly nonsense to stock-market analysts who want a ready supply of quarterly data. And it prevents companies from innovating and from investing properly in customer relationships.

Rory Sutherland

So they were going through average call time, average wait time — evaluating the call centre purely on operational efficiency. And Dyson basically said: stop right now, you've got this all wrong. We should treat it as an honour if one of our customers chooses to get in touch with us, and respond accordingly — as if we're flattered by the contact, not bothered by the interruption. That's roughly what the person said happened in the meeting. And that's why my stingy late father had four Dysons. Every time he rang them, maybe once a year, they did something astonishing — really helpful, solved the problem, the part arrived the next day, sometimes they didn't even charge for it. So he completely trusted them, and was willing to pay an enormous premium over other vacuum cleaners with the same notional effectiveness, precisely because of that trust.

Rory Sutherland

A really good service organisation allows for very streamlined, efficient service for people who know exactly what they want, and extremely empathetic service for people who are undecided, uncertain, or in an unusual situation. You need to do both. That's where the tech bros have got it wrong — they see tech as a one-way street towards ever greater efficiency and streamlining. And, let's face it, tech bros are not neurotypical in terms of what they want from things. When you allow tech bros too much power over decision-making, along with their running-dog lackeys in management consultancy, you're optimising for something that may be very distant from what your real-world customers actually care about.

Rory Sutherland

Anybody in the tech industry — just as anybody in advertising, myself included, is overweighted towards a belief in the power of advertising to solve all problems. I'm guilty as charged. But ad people don't get much opportunity to convince others of the rightness of their argument. What's happened is that the tech companies and consulting firms that sell stacks — and I owe a lot of this to a self-taught Libyan marketing writer, a former boxer called Adel Bori — have taken over the finance department. I coined the phrase 'technoplasmosis', by analogy with toxoplasmosis. The marketing metrics the finance department has faith in, and demands from marketing, are not the metrics most conducive to building brand and customer value over time. They're the metrics most conducive to selling tech solutions to the company.

Rory Sutherland

It's all short-term, bottom-of-the-funnel, transactional stuff — click-through, how you can shovel money to Meta a bit more efficiently. It's not about long-term value creation at all. Now, all that bottom-of-the-funnel stuff is important to get right — I'm not disparaging it — but it's only a third of the game. They're not interested in the other two-thirds, because they don't make money if you spend money on your call centre. It's a bit like cybersecurity — it's seen as a cost.

Rory Sutherland

I'm obsessed with personal factors.

Rory Sutherland

And the rarer something is, the more likely it is to be scarce — so overpaying becomes rational.

Rory Sutherland

I met someone you must interview, Philip K. Howard, who wrote Life Without Lawyers and has a new book about restoring the spirit of American can-do. He argues that a large part of economic decline and social malaise comes from the over-intrusion of law and regulation into practices that should properly be left to subjective human judgment. We've created a culture where people are so afraid of making a subjective decision that they fall back on often totally inappropriate rules. There's a whole class of people — in the private sector as much as government — more interested in adherence to approved procedure than in quality of outcome.

Rory Sutherland

Exactly. Common sense would be to opt out in certain situations and use your judgment, but if you do that, there's no upside and considerable reputational and career risk. An awful lot of quality human decision-making has to be tacit and instinctive. I think it's Michael Polanyi who says most of life is like a kaleidoscope — we never completely encounter the same situation twice. The great evolutionary gift of the human brain is adapting to context. Regulating for the universal defeats that. Lawyers love it, of course, because they make money out of it — arguably the legal system, particularly in the US, has strayed into areas once settled by two humans amicably finding a creative resolution. And there's no tort law reform in the US, partly because I was told that trial lawyers are among the largest donors to the Democratic Party, so they resist it. A legal decision can make perfect sense within one setting but set a precedent with ludicrous second-order consequences. In one of Philip K. Howard's cases, someone demanded a tree be cut down because their grandchild was allergic to the nut. If you accept that, you've opened the path to widespread deforestation, because nobody can grow a tree anywhere someone might claim to be allergic to. There's a case in England where a drunk man broke into a park, dived into a shallow pond and hurt himself, then sued because there was no warning notice. The law lords said: if you take that ruling to its natural conclusion, you'd have no lakes, no swings, no playgrounds — everything festooned with warnings. The legal solution has become the default, when it should be the last resort.

Rory Sutherland

Your fellow countryman John Ralston Saul — you Canadians totally underrate yourselves — wrote a book I think called Voltaire's Bastards. He argues that human brains evolved with a variety of mental capabilities, only one of which is the capacity for reason. There's also imagination, creativity, common sense. We have a whole range of mental mechanisms gifted to us by a few million years of evolution as a social species, and yet we've made rationality the gold standard. This is what's weird about working in advertising — and it's probably similar in theoretical physics and entrepreneurialism. In those fields, rationality is the bronze standard. In most institutional decision-making, quality of argumentation is the gold standard. In advertising, if you come up with a rational solution, people say, 'Yeah, it's all right, but can you do a bit better?' Is there an ad that says the same thing more emotionally? That's funny? That people will remember and act on? The rational solution is where you start — you use it as a springboard to something better. There's a wonderful quote from Niels Bohr: 'You're not thinking, you're merely being logical.' He also said that in boring physics the opposite of a good idea is wrong, but in high-level physics the opposite of a good idea might be another good idea.

Rory Sutherland

There was an understanding then — and the remuneration of agencies respected it, because you were paid on commission. If you had a big idea and the client spent millions running the campaign, you made money from it for years afterwards, like royalties on a book. Then media independence came along, and we had to be paid by the hour, like lawyers and management consultants — and we've never recovered, because it's a catastrophic way to be paid. Marketing is fat-tailed, and so is innovation, R&D, pharmaceutical research, science. Five to ten per cent of what you do delivers perhaps 110% of the value. Paying people by the hour, and demanding that every quantum of effort be matched to a quantum of value creation, is completely wrong. Let me give you an example. There's an idea conceived by Ogilvy Australia for a very large American consumer-goods company. It has made that company in excess of a billion dollars in the last ten years, still running in a hundred markets. For that idea, the agency in Australia made $350,000 Australian dollars. You have a billion-dollar idea and you get to buy a small flat in a crap part of Sydney. It's Jeff Bezos's point: in baseball you can only score four runs, but in business you can score a thousand. Half the purpose of marketing isn't gradual incremental improvement — it's finding another way to hit the ball out of the park. If you can only claim the credit to the extent it delivers value in the quarter you had the idea, you're underfunding your marketing. You wouldn't tell a pharmaceutical company to invent a blockbuster drug this week or they're all fired. Here's the brutal truth: you don't find entrepreneurs in chess clubs, you find them in casinos. They're playing games of chance with an occasional very high payoff. A lot of life is exactly like that, but you don't know in advance where the huge payoff will come. The people running organisations for financial predictability are trying to turn it into chess — a low-variance, mechanistic, predictable process where the most you can score is one for a win.

Rory Sutherland

Once you've ensured you're not going to starve to death and you've looked after your children, 50% of your effort in life should be attempts to get lucky. It's what Nassim Taleb would call increasing your surface-area exposure to positive upside optionality.

Rory Sutherland

I'm going to defend some of these companies. Take Bud Light — they couldn't necessarily have anticipated it, because it was confected outrage. I'm politically on the right, and I get just as angry at confected outrage on the right — 'Oh, they've gone woke' when you're merely showing a mix of ethnic groups. Both sides do it. There was confected outrage on the left about American Eagle, and confected outrage on the right. It's done for signalling purposes by a very narrow group of people. Gillette was different — that wasn't confected. They ran an ad that I'd argue, and even my wife would argue, was needlessly insulting towards men. It conflated the MeToo movement with barbecuing, and took a definition of toxic masculinity that spanned everything from things all right-thinking men would condemn to two boys having a small scrap on a patch of grass — which all primates do. It was almost a deliberate affront to your core target audience. The Bud Light thing, in context, was an influencer campaign most of the company was probably unaware of — they sent personalised cans to various influencers, one of whom was Dylan Mulvaney. As a Brit, I have to confess the gender thing isn't quite the flashpoint in the UK or Canada that it is in the US. We've had pantomime for 200 years — men dressing up as women. Some Like It Hot was highly controversial with the US studios; my grandmother, a conservative woman in provincial Wales, went to see it and it wouldn't have occurred to her there was anything controversial. It was simply funny. They hadn't made Dylan Mulvaney the face of Bud Light. Creating these cultural flashpoints through confected outrage is something to be disparaged whether the right does it or the left does it.

Rory Sutherland

Jaguar wanted to look unlike anything else. That famous 'ad' was never an advertisement — it was a brand film shown at the launch of the car. A right-wing podcast in the UK went, 'It utters the most outrageous anti-conservative sentiment: copy nothing.' But 'copy nothing' was the exhortation of Sir William Lyons, who founded Jaguar — he said it in 1932. Where they made a mistake is one we all make: we benchmark against our most obvious competitor. Don't do that — all you'll do is make yourself a copy of them. Jaguar was always trying to compete head-to-head with BMW, Mercedes and Audi, and because of the scale of those entities it was always going to lose. If you're happy to buy a BMW, an Audi or a Mercedes, and also happy to buy a Jaguar, you'll probably end up buying one of the big three because of scale and winner-takes-all effects. So if Jaguar wants to survive in the electric age, making cars in the UK, it has to find a different target audience — the car of choice of the wealthy, younger creative class. That's a reasonable bet.

Rory Sutherland

I really liked the Chris Bangle-era BMWs, but I can't buy one, because part of my shtick is being a bit left-field. If I drive around in an Audi, it screams 'I work in financial services.' I've always bought slightly weird cars. What do you drive back in Canada?

Rory Sutherland

Do you have one of those stickers that says 'I bought this before Elon went mad'?

Rory Sutherland

This is where your wonderful compatriot Roger Martin makes the point that economists have a fantasy of companies in direct competition, driving down price and increasing efficiency while supplying the same thing — based on the false premise that people know what they want to begin with. When you don't create differentiation, everybody suffers. A differentiated car market is more valuable to investors, because there's more variety. It benefits the companies, because they can achieve a reasonable profit on something with a degree of scarcity or uniqueness. And it benefits the consumer, who ends up with more choice. What often happens with a regulated telecoms or insurance market is that everybody is forced to compete along the same dimension, and you end up with red-ocean competition where nobody wins.

Rory Sutherland

With Gillette, the research showed it was deeply problematic with a large swathe of people. Has American Eagle suffered? I doubt it. In some ways it's an ingenious strategy: you press the hot buttons of 1% of the population, and they repeat your message accompanied by their own signalling outrage. Meanwhile you get free media coverage practically everywhere. The media budget for that Jaguar film was zero.

Rory Sutherland

There's a weird sensitivity-signalling, sometimes called a purity spiral, where you signal your moral or political purity by signalling heightened sensitivity to anything that might conceivably offend someone else — even when the group you claim to be campaigning for is completely unconcerned by it. Everybody blames social media, but I'd argue the mainstream media has an interest in provoking a fight, because then there's something to cover. Nobody's interested in reading about peace and harmony. That's an evolutionary tendency: if a fight broke out across the street, we'd have our noses pressed against the glass; if people were amicably discussing the weather, we wouldn't pay it the slightest attention. So the only difference now is the tools available. In 1975, to find someone outraged by an ad, you'd have to do some legwork; now it's one search on X. Willful misunderstanding is another technique — it's perfectly obvious the ad wasn't meant to suggest Sydney Sweeney is the flower of Aryan womanhood.

Rory Sutherland

Words like 'uncomfortable', 'offended', 'inappropriate', 'unsafe', 'triggering' don't really belong in the public sphere. For a few hundred thousand years we simply sorted these things out among ourselves — we didn't make recourse to the university dean or the supreme court. The worst thing is when someone is described in the newspaper as 'accused of inappropriate behaviour'. I've literally had to book people for speaking engagements, gone to their Wikipedia page, and it says 'accused of inappropriate behaviour' — and I have no idea whether they're the next Epstein or whether they told a knock-knock joke two people found unpleasant.

Rory Sutherland

One thing I find really disturbing is the media describing people who oppose uncontrolled immigration as a 'far-right group'. If you take an opinion that may be held — and, for the record, I'm fairly benignly disposed to immigration, within reason — but I also believe in democracy, and if a significant proportion of the population disagrees with me, I owe it to them to hear them out, because their circumstances differ from mine. Some rich, pro-immigration people say their Polish housekeeper is wonderful — but that's not an experience of immigration shared by the other 98%. The job of a democracy is to accept the majority opinion even when it goes against your own. Vilifying an opinion held by a large weight of the population is deeply dangerous: people think, 'Well, if that makes me far-right, then it looks like I'm far-right.' Calling people deplorables is a terrible way of getting them to gang up against you — and then people don't speak up, you lose the debate, and you lose perspective, because you never hear the other side.

Rory Sutherland

A very good Oxford economist, Paul Collier, wrote an economically balanced assessment of migration. If Nigeria trains doctors who immediately move to the United States, how is that a good thing overall — a poor country training doctors who move to a rich country that arguably has enough?

Rory Sutherland

All Collier said is that it's inordinately more complicated. The right of recent immigrants to family reunification, for instance, is a bit dubious, because you're giving someone a right the native population doesn't have — I can't pick five Canadians and get them British citizenship. I've yet to meet anyone who totally disagrees with all immigration; it's a matter of what reasonable immigration and assimilation look like — and it should be decided by someone other than human rights lawyers. As a branch of law, it isn't a partial entity. There's a phrase, I think from Upton Sinclair: it is difficult to get someone to disbelieve something when their salary depends on believing it. Just as management consultants have every incentive to sell in digital transformation programmes, Buffett and Munger had a good way to sum it up: never ask your barber whether you need a haircut. A human rights lawyer is not in the dispensation of justice — they're in the amplification of grievance business.

Rory Sutherland

Weirdly, you can resell some of them for more than the purchase price — with the Hermès Kelly bag, they won't sell it to you until you've been a reliable customer, so the price on eBay is higher than in the store. These are Veblen goods — a large proportion of their value depends on being perceived to be expensive. There are goods whose emotional purpose is captured in the endline. There's a lot of hidden truth in advertising endlines. The L'Oréal one — 'because I'm worth it' — is partly the person advertising to themselves. When you drive around in your blinged-up Tesla, you're not doing it to pick up chicks; a large part of it is signalling to yourself: I deserve this, I'm the kind of person who drives this. It gives you an ego boost, a sense of reassurance.

Rory Sutherland

Part of the reason bags became so expensive is that very high-end clothing can only be worn in specific situations, whereas a bag, like a man's watch, can be worn every day. One reason they're expensive is a metric I love — cost per entertainment hour. I wear a Casio G-Shock, about £130, because as a gross rationalist I decided the best watch is one cheap enough to wear in the shower, so you never take it off. But Professor Paul Dolan, the behavioural scientist at the LSE who worked with Daniel Kahneman on happiness, wears a Rolex. I asked him about it, and he said it's extremely good value, because it makes him feel good every single day when he puts it on, and in 20 years he'll give it to his son, who'll enjoy exactly the same thing. As a repository of meaning. Cost per entertainment hour also explains why relatively poor young people will spend $90 or $100 on a computer game — which seems a lot until you realise they might play it for 80, 90, 100 hours. Compared to the cinema at $10 an hour, it's super cheap. It used to annoy me when rich people in Britain got snarky about poor people having large televisions. If you haven't got much money, TV as long-term entertainment is spectacularly cheap — you're not going Porsche racing at the weekend or popping up to the Met Opera — so having a really large television is a perfectly rational decision.

Rory Sutherland

Geoffrey Miller is fundamentally right that a lot of what we're doing is advertising ourselves to other people — The Mating Mind is extremely good, as is Will Storr's The Status Game. The caveat I'd give to reading these, a bit like The Selfish Gene, is that if you're at all sensitive you risk a few depressive episodes — not because they're untrue, but because they are. You go, 'God, am I really that shallow? I explain why I do things, but deep down the reason is to show off or establish some one-upmanship.' There's a question raised by people like Richard Layard: do I make my neighbours less happy by buying a newer car, because I've changed their comparative frame, so my pleasure comes at the expense of theirs? But it's not that simple. If you're a real car obsessive and your neighbour buys a Ferrari, you'd be delighted, because you can go and talk about torque vectoring and the naturally aspirated V12. Jay Leno is one of the world's great philanthropists, because he spends a fortune on rare cars and then shares his passion with an audience of millions — translating money into something both selfishly and generously pleasurable.

Rory Sutherland

When you read these books you realise status is a thing within us we can't turn off. The currencies change with fashion — at my school, if you were the first kid with an LED digital watch, people were in awe of you. Would it be nice to have the power to completely disregard the opinions of others? Yes and no. Such a society might be better in some respects, but also atrocious — people would go shopping naked. Is shame necessary? There's a book of that name by Jennifer Jacquet. As a social species we're massively calibrated to care about the repute of others, which is why some things need to be expensive — it's a costly signal, the peacock's tail. The man who rescued the British sparkling wine industry did so by improving quality by 10 or 20% and then putting the price up by about 150%. Because in the champagne business, it doesn't matter how good the drink is if people think you bought it for £8.95 — it's not doing the job it's supposed to do, which is to signal generosity, hospitality, or to mark a special occasion. 'Oh, I see you've taken out the good stuff, because it's my birthday.'

Rory Sutherland

There's a serious question: can we take an innate, immutable human instinct and harness it for good rather than ill? Geoffrey Miller's example: two parallel tribes. In one, the men signal their desirability as mates by fighting each other with axes — a negative-sum game. In the neighbouring tribe, they signal it by hunting and bringing home meat they share with the tribe — a positive-sum game. Human pursuit of status has both positive and negative externalities, depending on the currency you choose to signal. It probably drives a lot of ambition and progress. And a lot of valuable goods are affordable now precisely because they started as luxury goods. I always mention that my grandparents were the fourth family in Wales to own a dishwasher — it cost about £100 at a time when their very nice house cost £4,000. It's still working; they bought it around 1959, 1961.

Rory Sutherland

I'll make an unusual foray into environmental responsibility. Two simple things: run your appliances when there's an abundance of clean electricity — you don't have to change what you do, just when you do it. And if your dryer doesn't have a heat pump, get one with a heat pump. It's slower, I'll acknowledge, but far more energy-efficient. Or, if you live somewhere like Arizona, dry your clothes outside. In Britain we didn't have the same social stigma about hanging clothes to dry, though we're getting it now. I was on Fuerteventura, in the Canaries — the place had a washing machine but no dryer; you hung it on the line and 40 minutes later it was ready to wear.

Rory Sutherland

A lot of it is that those weird housing associations already have rules against it, and bit by bit the social norm spreads. American housing associations are basically like living in a Nazi regime — those co-op apartments in New York demand information the IRS can't demand, and can kick people out. What happens is that once a behaviour drops below a certain threshold, you hit an inflection point. It's the same with children playing outside. When I was 11, I used to cycle 11 miles to the nearest town to see my grandmother on my own, and climb onto the apex of the roof and wander around 30 feet up. My parents were aghast, years later, that they'd ever allowed it — but at the time it was completely normal.

Rory Sutherland

If, in 1974 or '75, I'd been hit by a car cycling, or abducted, my parents would have been described as unlucky. Get past a threshold, and that behaviour becomes weird, and now the parents are held to be irresponsible and blamed. I was, funnily enough, hit by a car — my fault, I failed to signal before manoeuvring — and nobody suggested it was my parents' fault for letting me cycle around. It was just a normal thing you did. You get these things that are products of social norms where you suddenly hit a threshold: tattoos among the middle class, for instance. Perfectly middle-class people now have body art; it would have been deeply weird in any middle-class milieu in the 1960s or '70s. You've got to be 59 to notice this stuff, because a lot of it happens over a long time. Vegetarianism, veganism — there's a point at which something goes from weird to mainstream. It's not an even process, and sometimes you never reach the threshold at all.

Rory Sutherland

A large part comes down to Michael Polanyi's idea of a tacit skill — we know more than we can tell. The general good rules: write conversationally, much more conversationally than people think they should, because everybody thinks they have to write a formal essay. Two examples. David Ogilvy's books are incredibly readable — he was a copywriter first and an author second. He writes extremely plainly but throws in the odd Ciceronian long word, just to remind the reader they're not an idiot; it flatters the reader as much as the writer. And Conan Doyle — Kingsley Amis thought him one of the greatest prose writers in English. Bear in mind a lot of that was written in 1880. Read most stuff from 1880 and you constantly have to go back to page 27 to work out who Mr Hosmer Angel is. At no point in a Sherlock Holmes story have I ever had to go back a page to work out who someone is. In terms of clarity, they're astonishing.

Rory Sutherland

For persuasion: use verbs of movement. Use verbs in preference to adjectives, and adjectives in preference to adverbs. Use Anglo-Saxon words rather than the Romance words, mostly, without being silly about it. Convert a feature into a benefit. And sometimes all you need to do is tell people a fact. I'd love to know whether, among people who were anti-vax during Covid, there was a difference between those who knew vaccination dated back to the 18th century and smallpox — a 250-year-old practice — and those who thought it was some weird newfangled thing. Do you ever watch Presh Talwalkar on YouTube — the geometry puzzles? Sometimes a puzzle looks impossible until you draw one extra line, and the solution becomes obvious. Sometimes in marketing all you have to do is tell people a fact. It's not always about persuasion — it's putting people in a state of knowledge or conviction that this thing can make a difference to their lives.

Rory Sutherland

You're almost always up against the two human default modes: do what everybody else does, and do what I've done before. For obvious evolutionary reasons, those aren't necessarily optimal, but they're much less likely to be catastrophic than trying something new nobody else does. We're a herd species and a habitual species. So marketing something genuinely new — the Tesla, the electric car — meets a degree of extreme anxiety you don't get with a repeat purchase or the brand leader. Something I only realised about a year ago, 35 years into the business, is that as a consequence, big innovative new ideas don't require less marketing — they require more. You're asking someone to do something nobody else has done, and something they haven't done before, both of which create disquiet. Quite often, in the early stages of a technology, the reassurance happens one to one. It was my brother, an astrophysicist, who knows all the maths about kilowatt-hours, who gave me the reassurance to buy my first electric car — I've now had three. If he hadn't bought one, would I have? Probably not. The classic geek idea — 'our idea is so good it'll sell itself' — is wrong.

Rory Sutherland

The only real measure of whether an innovation is significant is whether it changes the way people behave, in both first- and second-order ways. Is AI at that point yet? And here's the lesson of all tech: loads of geeks compete for technological, numerical superiority, and then someone else comes along with a cute user interface and makes all the money. That's basically Steve Jobs. Nobody's done that yet for AI — maybe the weird pendant Jony Ive is concocting is what it is.

Rory Sutherland

That's a very engineering point of view, because you're judging technology by its engineering qualities rather than its human appeal. In the camera world there are people called 'measurebators', denigrated because they're obsessed with the numerical qualities of the camera — focal lengths and all that — and they don't take very good photographs. Betamax is the famous example of a superior technology that failed to capture network effects. Everybody was competing to make a slightly faster IBM-compatible PC, but they were all grey and beige. Nobody in the tech world would say, 'The problem with this PC isn't the clock speed — it's that if I put this grey box in any room of my house, it turns that room into an office.' You might as well put a photocopier and a filing cabinet in the room. Whereas when Jony Ive comes along with the lickable iMac, you can put it in any room and it enhances the space — it's an adornment. Their failure to understand the wider context is exactly why nerds hate marketing: they think in a perfect world, nerd metrics win. But the consumer is much more bothered by the little bounce when you get to the bottom of the iPhone scroll. You could ridicule Ive and Jobs for their obsession with bezels and chamfers — but multiply that by a billion owners using the thing a hundred times a day, and that's a hundred billion encounters. It probably matters more than the specs.

Rory Sutherland

I lost faith in Apple when they cancelled the car. They had the brand power to create, for places like New York and London, a form of micro-transport that was really cool and efficient. One of the gifts of a strong brand is the power to disrupt and create new categories — people will buy a weird product from Apple or Ford much more readily than from Alfa Romeo, because they think, 'Well, if Ford's doing it, it must be okay.' They could have used that power to create new categories of transit, which we need. The finance people killed it. And here's a good tip: there's always a good reason to buy Korean stuff. Do you know why? Because the Koreans are going to make fantastic tech and cars regardless of the profit motive — partly to wind up the Japanese. Before the Japanese invasion, Christianity was a tiny missionary religion in Korea; when the Japanese invaded, the Christian population refused to acknowledge the divinity of the emperor, and some were martyred for it, so it became the patriotic religion. If you buy a Hyundai or a Genesis, there's a dual motivation: make a bit of money, and something more. Similarly, a lot of German businesses are driven by sibling rivalry — Puma versus Adidas, Aldi North versus Aldi South, the Porsche and Piëch families. Sometimes the family business has a motivation from which the consumer is the winner. Most people working for a company don't get up in the morning to enrich the share owners.

Rory Sutherland

Just expanding the adjacent possible. That's a pretentious phrase — push the pebble a bit further. One reason I do a lot of this stuff is the feedback: every now and then someone comes up and says, 'I made a different decision because of something you said. I bought my house because of you.' The mistake all creative people make is to go, 'Rationality is silly, what you need is creativity.' No — what you need is two strings to your bow. It's a complementary mode of problem-solving that works best in parallel with rational, quantitative, data-driven measures. But the quantitative measures shouldn't be allowed to crowd it out. The reason someone bought a house because of me is that I said: when you're looking for a house, don't optimise, because everybody will want that house. Instead, find something the house has that most people won't like but you don't care about — next to a pub, say. Not a rough pub, I don't want fights outside my house, but a good, happy pub is music to me, and I don't sleep before midnight anyway. A railway line, personally, is a bonus; to most people it's a negative. Go and look for those things where you can arbitrage what's possible.

Rory Sutherland

If you've got a problem to solve, don't define it in psychology-free terminology. In America you have a temperature and a 'feels like' temperature — a very intelligent thing, because what makes us feel hot isn't just the ambient temperature but a combination of temperature, humidity and breeze. When I go outside, I don't need to know the ambient temperature; I need to know whether I'll feel hot. In the same way: do not define an objective designed to serve human beings without considering psychological factors, because you might be able to solve your problem very cheaply and efficiently by changing the psychology, not the technology. Provided people look at both with a reasonable amount of imagination, I'm not angry with them. I'm only angry with accountants, lawyers and economists — not because they do what they do, but because they have too much power doing it, and they've achieved a kind of monopoly over decision-making that I don't think they have a reasonable claim to.

Rory Sutherland

That would be fantastic.