Classic economic theory had homo economics at its centre: a completely rational being that maximizes utility and wealth. When buying, say a smartphone then people should buy according to these economic principles. However, this model totally fails to predict actual human buying behaviour. The most desired smartphone model is not the most economic one, but the most expensive one: the iPhone. How can this phenomenon be explained?
The long tail theory (Chris Anderson) is an extension of the classical model. It predicts that quasi perfect markets that are possible because of the web would cater to many different needs. In the case of smartphones, this means there should be smartphones for every type of person (e.g. outdoor people, geeks, fashionistas, etc.) and this is true. As far as budgets go, you can buy smartphones from $50 to $1000+, yet among the thousands of smartphone models there is one model that exceeds all others and one company that gets the lions’ share, while the majority of smartphone makers don’t make any profit at all.
Many people simply claim they pay a superior price for a superior innovative product. However, that is not true. There are cheaper models than the iPhone that beat the iPhone on specs like camera, speed, battery life or whatever features people desire most. The iPhone hasn’t been innovative since Steve Jobs died, either. It mostly copies over features from successful Android makers that catch the eye of the market. NFC, triple cameras, night sight are all features Android phones had long before the whatever current iPhone model when it was launched. And still, iPhones are selling like hot cakes.
How can we make sense of such behaviour? Evolutionary psychology would answer that “utility” can only be obtained when an item increases survival chances and/or an individual’s reproductive potential. The economist who came closest to this thinking was Thorstein Veblen with his idea of “conspicuous consumption”. According to this theory, people buy iPhones not because they need them, but because they want to show off their status and how much money they have got to spend.
There is, however, considerable variation in spending behaviour. Extroverts tend to spend much more than introverts and it seems likely that they have a higher need to display their status. Another factor that classic economy theory neglects is conformism. Some people tend to be more conformist than others. Some people start to show off their status and the rest plays “keeping up with the Jones, er… influencers”.
In my theory of evolution of personality according to subsistence type, the most conformist type would be “farmer” (SJ in Myers-Briggs). As farmer types make up the majority of the population (around 50%), this would explain the winner-takes-all economy we can see around us everywhere. Instead of the long-tail, people tend to buy the same products, watch the same TV shows, consume the same goods.
In my theory of evolution of personality according to subsistence type, the most conformist type would be “farmer” (SJ in Myers-Briggs). As farmer types make up the majority of the population (around 50%), this would explain the winner-takes-all economy we can see around us everywhere. Instead of the long-tail, people tend to buy the same products, watch the same TV shows, consume the same goods.
The long tail does work much better for hunter-gatherer personality types (N types in Myers-Briggs), who tend to care less about social conventions and have their own passions. Adam Smith and Chris Anderson are, after all, INTPs, i.e. hunter-gatherer types. Personally, I was an early adopter of Amazon when they were still only selling books I got my first book about Evolutionary Psychology from the US via Amazon.com for which I was much more willing to spend my money on than I would have been willing to spend it on an iPhone.
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