One of the solemn seasonal rites is choosing a sparkling wine. Cava? Prosecco? Champagne? Perhaps Pipi du chat gazifi? from an industrial park near Calais? What determines our preference? Cost ... or something more subtle?
All of life, Nietzsche believed, is a question of taste. Economists used to think they understood this mechanism: preferences are based on price. Look where that got us. The classic economic model presents cheapness as an incentive, but that takes no account of subtle vagaries that routinely overwhelm considerations of cost. Choice is not a science, it’s an art. Possibly even a black art.
High price may be an incentive, not a deterrent. Experiments at Caltech have shown that people prefer a wine when told it is more expensive. But there’s another truth wanting to escape here.
MRI scans showed hectic activity in the orbitofrontal cortex while tasting wine. This is the part of the brain that calibrates true “value”. This is the part of the brain missing in the classical economist. Similar tests also showed that the shape of the bottle and the graphics of the label influence desire, but any designer or artist could have told a calculator-prodding economist or white-coated behaviourist that many years ago.
For example, champagne’s appeal defies simplistic assumptions about value for money. Meanwhile, continuing attempts to protect the denomination from predatory low-cost imitators reflect a deeper human need to recognise quality.
Advertisement
True, when it comes to appellation d’origine, the Eccles cake has, toponymically speaking, the same theoretical competitive advantage as champagne, but there are more lessons to be learnt from the wine than the confectionery. Not least because the Eccles cake has failed to become a global commodity.
The arid assumption of classical economics that price alone dominates human incentive is everywhere under attack. This is because it is wrong. People disagree. History disagrees. No one knows or cares what the great adventures of the human spirit cost. Anybody seen the profit and loss statement for Stonehenge or the Great Eastern? Alec Issigonis’ Mini was the most influential car of all time and no one knew what it cost to manufacture. Andr? Citro?n’s cars were rivals in ingenuity and wonder. Citro?n said: “From the moment an idea is worth having, no one cares what it costs.” Billy Wilder asked someone what was the thing they never, ever heard in Hollywood. And the answer was: “You must go and see that movie. I hear it came in under budget.”
Jonathan Ive’s time-consuming and expensive neo-mystical concentration on engineering the iPod to perfection would not have been tolerated by classical economists who would make do with a clunky old MP3 player. But the iPod changed the world.
Those same economists would carbonate white wine because you get the same effect as champagne for less money, but their doctrine is fading into history because it cannot explain that desire is not numerical.
When we begin to appreciate abstract values more than the cold calculus of metrics, when we use judgment, not charts, we are at a strange moment when art and economics are blurred, but then they so often have been.
Advertisement
John Ruskin moved seamlessly from art criticism to political economy. Admittedly, this progress was accompanied by mounting and debilitating insanity, but you cannot be interested in buildings and paintings, landscape or food and drink — in the quality of life — without being interested in the economic fundamentals that sustain, or undermine, them. And the issue of price obsessed Ruskin.
Never mind that his famous observation — “There is scarcely anything in the world that some man cannot make a little worse and sell a little more cheaply. The person who buys on price alone is this man’s lawful prey” — is, according to scholars, a fake. Nonetheless, here is a profound truth that should be tattooed on the foreheads of the Treasury officials who pennypinched on servicing Nimrods and thought that they could do Chinook avionics more cheaply than Boeing. It is, as Ruskin actually did say, unwise to pay too much, but equally unwise to pay too little. A fool and his money stay together.
Classical economics is skewed by what Freakonomics calls “systematic biases”. This pseudo-science is merely a set of prejudices, no more objective than a liking for, say, Portuguese tiles, a Reliant Robin or Jean-Luc Godard. No one priced the pyramids. At long last, some economists have, blinking in the light of a harsh new dawn, noticed this. Cass Sunstein, of Harvard, and Richard Thaler, of the University of Chicago, are the conceivers of “nudge economics”, the latest volume in a branch of pop academic studies that will eventually, if unhappily, become known as Gladwellology.
They tell us that nudge economics is about “anything that influences choices”. So, that can include colour, shape, context, smell, texture ... as well as m?thode champenoise or malolactic fermentation or monosodium glutamate. Thus economists, having catastrophically failed to predict or direct the generation of wealth, now seek to annex aesthetics by way of explanation. After years of hectoring the rest of us with their single-path argument about price, economists have discovered the variety and feel of experience.
Tellingly, the nudgers describe the significance of a “thoughtful choice architecture”: by employing building design as a metaphor, they unconsciously reveal the primacy of aesthetics in behaviour. Indeed, they call it “behavioural economics” ... which is to say taste, the attribute separating textured civilisation from cheerless Darwinism and joyless cost-accounting. Taste is a mixture of inherited proclivities and acquired preferences and it tells you what something is worth, not what it costs. So, aesthetes may be more valuable than accountants.
Advertisement
So, as corks pop over the next few weeks, consider it not a prelude to a tipple, but a lesson in the new order. Cava? Prosecco? All very well, but champagne is different, often better. Certainly, more expensive.
Back to Ruskin: “The common law of business balance prohibits paying a little and getting a lot.” Quite so. Crude notions of competitive advantage or supply and demand brought us traffic jams, battery chickens and dud military technology. Art brought us bicycles, Chartres and champagne. Taste lets us distinguish between good and bad, the former and the latter. It’s more important than price because it’s more valuable.