Syndicate content

Inertia

The Things We Do: What Obamacare Teaches Us About Consumer Behavior

Roxanne Bauer's picture

How bad would the customer service at your bank have to be for you to switch to another?  How long would you have to sit in a waiting area, reading bad magazines, before you would look for a new doctor?  How about switching health insurance plans?

At the foundation of economics is the premise that people make rational choices, based on the information they have. This may be true, but as a decision becomes more complex, so does our desire to avoid it. According to the literature on economic behavior, this phenomenon is known as consumer inertia.

As Stigler and Becker (1977) state: “the making of decisions is costly, and not simply because it is an activity which some people find unpleasant. In order to make a decision one requires information, and the information must be analyzed. The costs of searching for information and of applying the information to a new situation may be such that habit is often a more efficient way to deal with moderate or temporary changes in the environment than would be a full, apparently utility–maximizing decision” (pg. 82).

Citizens In Want of Stamina

Sina Odugbemi's picture

This is the age of hopeful citizens where in almost every part of the globe citizens are mobilizing, marching and, often successfully, pushing for change. But this is also the age of increasingly frustrated citizens. In some cases, the frustration is occasioned by the failure to achieve changes in regimes even after an astonishing sequence of heroic efforts and sacrifices by citizens. In other cases, the efforts originally appeared successful. Long-entrenched dictators fell and citizens were ecstatic, believing glorious days were imminent. Yet, in many of these cases, one disappointment is jumping on top of another. Change is proving far more difficult to achieve; it is even proving elusive.