Sugar-Coated Sleight of Hand6. September 2011 by Herman Brodie
Phony outrage broke out in the office this morning when we learned that some snack manufacturers had achieved the feat of producing lower-calorie candy bars by simply reducing their size. The smaller bars contain the same proportion of sugar and fat as their high-calorie counterparts – and cost the same price – but there is simply less of it in the package. At first glance, it seems like another example, marketing sleight of hand. From a behavioural economics perspective, however, the candy-makers may actually be doing consumers a favour.
The well-established trend towards healthier eating means that people genuinely want to eat fewer sugary and fatty snacks. The problem is that we lack the will-power. We tell ourselves that we should stop eating those Chompo Bars, but we invariably leave the kiosk with one in our hands and, while unwrapping it and taking a bite, wonder how on earth it got there. So a manufacturer who makes a bar that is half the size is delivering a valuable service: consumers can now carry on buying their daily treat but now they will consume only half the calories. Candy lovers could of course achieve the same feat all by themselves, namely cut the original full-sized Chompo Bar in half and eat it over two days, but they won’t.
Why then charge the same price for the smaller treat, given that the ingredients are exactly the same as the larger bar. Here too, there is a behavioural angle. A half-sized snack at half the price would invite the consumer to buy two, perhaps one in the morning and the other in the afternoon, without any economic disadvantage. A premium price is necessary to discourage precisely this tendency (although this could probably be achieved with a smaller premium).
What most found annoying about the news, I suspect, was the discovery that the snack manufacturers could so easily profit from people who are simply trying to eat more healthily. In fact, most consumers are aware of their limited self-control and are willing to pay in order to have access to self-control devices. A common self-control device is a Christmas club. Here, people agree to deposit a monthly amount with an organisation that ‘saves’ that money for them. At the end of the year, not before, the saver can use those funds to buy Christmas gifts for their loved ones from the organisation’s catalogue. Of course, the holiday shopper could save that money themselves, earn interest, and use the cash at the end of the year to choose from a much wider range gifts than those available in the catalogue. The problem is that they won’t do it. They can’t. Surely any device that allows us to render harmless our lack of self-control is worth paying for? Homo economicus wouldn’t need it, but then homo economicus doesn’t have a sweet tooth.