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Comment by mindslight | Hacker News Reader

> the revealed preferences of consumers for those things is the cheaper version, not the better version

I really hate the framing that puts this on consumers as if they're just stingy. The reality is that we have an economy that strongly discourages most people from choosing any option besides the cheapest. When someone comes up with a less expensive way of doing something, the Fed interprets this as a problem and creates enough new currency to make sure the cost of living gets more expensive regardless. So rather than a choice between less expensive and more expensive, what consumers are actually confronted with is a choice between slightly more expensive and much more expensive.

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I made the same argument recently when someone repeated the line “air travel is bad because consumers will always choose the cheapest option.” I’m pretty skeptical that almost any “race to the bottom” scenarios are easily attributed to consumer behavior, except perhaps in cases of commoditization where consumers reject attempts to differentiate products based on things like branding.

Part of the trouble with these is that, due to companies desiring to maximally exploit price discrimination or because of lack of economies of scale or whatever, the better thing is often unreasonably more expensive, so you don't really get a signal of what people would want without that price-gouging or other price-increasing effects.

Take refrigerators. There are a few little things they could add to every single fridge that'd make them nicer, probably for $20 or so per unit, call it $100 by the time it hits retail. So your $1,100 fridge could be $1,200 but quite a bit nicer. Instead, you can't get that stuff unless you spring for the $2,000+ fridge (think: things like rollers on drawers and shelves, slightly nicer finishes, that kind of thing). Do consumers not "want" that since only a tiny minority buy fridges with those features? No, of course that's not the case. But because there is no "cheap, but with all the cheap bonuses included, so just slightly more expensive" option, it looks that way.

I agree with that, and I think it aligns with the claim that customer preferences ought not be blamed.

> I’m pretty skeptical that almost any “race to the bottom” scenarios are easily attributed to consumer behavior

I'm not.

Most consumers are fickle, irrational, and often price-sensitive. They buy the $20 blender from Walmart that has a motor that will release the blue smoke in 6 months rather than the $50 blender that will last 5 years of frequent usage. Sometimes this is because of the whole "being poor is expensive" thing, but many times it's not.

> except perhaps in cases of commoditization where consumers reject attempts to differentiate products based on things like branding.

I think this applies to airlines.

I roll my eyes when someone says "I will never fly Delta/United/Alaska/etc again" because if you joined in every person's boycott because of one or two bad experiences they had, you'd never fly. They all will have delays, cancellations, and lost luggage.

I have absolutely zero loyalty or avoidance to any airline. I just go to Google Flights and pick who has the cheapest itinerary that doesn't suck too bad.

> They buy the $20 blender from Walmart that has a motor that will release the blue smoke in 6 months rather than the $50 blender that will last 5 years of frequent usage.

Ah, but that’s actually a great example. The $50 blender is probably just as crappy but with a slightly more recognizable brand (that used to make quality blenders until they were bought by a PE firm 10 years ago so they could milk the last bit of value from the trademark). You actually have to pay like $400 to get a blender that is substantially higher quality and even then you have to diligently find up to date honest reviews to make sure that brand hasn’t recently sold out.

> I have absolutely zero loyalty or avoidance to any airline. I just go to Google Flights and pick who has the cheapest itinerary that doesn't suck too bad.

Me too, much of the time. We’re not disagreeing about consumer behavior, we’re disagreeing about who to blame. The reason I do that is because there is simply no way to pay slightly more money for a slightly better flight. The only option is the cheapest possible flight, or one literally twice as expensive or more.

That’s my problem too that damn 400$ blender ends up costing me 800$ after I’ve done them due diligence of research it and burned the better half of an evening looking up reviews.

Very rarely is there a mid tier product unless it’s a Chinese brand that’s trying to establish

Walmart could stock two or three price-differentiated models. With internet shopping available now (and catalog shopping in the last century and a half) Hobson's choice is less of a factor, but it's still a factor.

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