What Do You Want?

I wanted to write about this topic back in December when I saw the December Men's Journal which had as their cover story "What Men Want". With Tom Brady on the cover I wasn't sure if that meant men want Tom Brady or if they want to be Tom Brady, but in any event, the question remains: What do you want? Is that a deep question? Does the answer require soul searching and meditation? Economists would tell you that they already know what you want: You want what you do. The standard joke is that two Economists walk past a Porsche and the one says to the other, "I want that Porsche" and the other says, "No you don't." The joke being that if the guy wanted the Porsche he would have gotten it already. (No one ever said Economists were very funny.)

Before you start saying, wait a minute, there could be lots of reasons why he hasn't bought the Porsche, well, go ahead and say that, because that's the point. Please, read this article first. The article explains the difference between "unconstrained" wants and "constrained" wants. If there is no cost to us, there are many things we might want, including a fancy car. But if the choice is between, as he says in the article, a new Lexus and cabbage soup at every meal or a Camry and regular food he goes for the Camry and the regular food. And because it's a choice he made, the Camry is what he wants, not the Lexus.

This is definitely splitting linguistic hairs here, but I think it's important. It's a cliche, but talk is definitely cheap. As Greg Behrendt said in a book I read recently, "On the Human Interaction Stock Exchange, our words have lost almost all their value." Case in point is the answer to the most noble job question from Men's Journal: U.S. Soldier. I'd like to see how many of the responders would still be saying Soldier if the job they listed was one they'd then have to do.

This whole theory of decision making as showing a person's true preferences is called Revealed Preference Theory. The basic concept is that consumers show their preferences for goods and services by their actions; their preferences (something generally unknown) become revealed through choices. The key acknowledgment in all of this though is that the choices are made among available options, which although obvious is important. For example, the fact that people work at Wal-Mart is evidence that they view working at Wal-Mart as their best option, given the choices they have. That's the problem: they don't have very many choices. So, Revealed Preference Theory doesn't necessarily show the optimal allocation of goods and services, but it does allow a glimpse into the decision patterns of people in response to their current environment.