Capitalism, casinos and free choice

Tim "Undercover Economist" Harford's column "Casinos’ worrying knack for consumer manipulation," takes a skeptical look at business and markets -- specifically their reputation for offering a fair trade between buyers and sellers. Inspired by Natasha Dow Schüll's book Addiction by Design: Machine Gambling in Las Vegas, a 2012 book on the calculated means by which gamblers are inveigled to part with more money than they consciously intend to, Harford asks a fundamental question about capitalism: are markets built on fair exchanges, or on trickery?

Consider, first, confusion by design: Las Vegas casinos are mazes, carefully crafted to draw players to the slot machines and to keep them there. Casino designers warn against the “yellow brick road” effect of having a clear route through the casino. (One side effect: it takes paramedics a long time to find gamblers in cardiac arrest; as Ms Schüll also documents, it can be tough to get the slot-machine players to assist, or even to make room for, the medical team.)

Most mazes in our economy are metaphorical: the confusion of multi-part tariffs for mobile phones, cable television or electricity. My phone company regularly contacts me to assure me that I am on the cheapest possible plan given my patterns of usage. No doubt this claim can be justified on some narrow technicality but it seems calculated to deceive. Every time I have put it to the test it has proved false.

I recently cancelled a contract with a different provider after some gizmo broke. The company first told me the whole thing was my problem, then at the last moment offered me hundreds of pounds to stay. When your phone company starts using the playbook of an emotionally abusive spouse, this is not a market in good working order.

Casinos’ worrying knack for consumer manipulation (Thanks, Tim!)

(Image: Slot Machine, a Creative Commons Attribution Share-Alike (2.0) image from kubina's photostream)