Supply and Demand: Do You Get What You Pay For?

By: Elka Wiesenberg  |  March 15, 2018
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Prada. Chanel. Gucci. Yves Saint Laurent. Valentino. The list could go on for pages.

Brand names. We all–excluding those people with incredible self-control and practicality–
want them. Many of us spend exorbitant sums, often more than we can really afford, to get the newest Burberry watch, or at least last season’s Kate Spade purse.

Why do we do this?

Since I was little, I was taught that name brands mean better quality. In some cases, this makes sense; you simply aren’t getting high quality fabric at Forever 21 like you are at Diane Von Furstenberg. Sometimes, though, the vast difference in pricing just doesn’t “add up.” I thought about this last week when I was doing my usual (NOT in class, of course) online shopping. Nordstrom.com, Google’s top website suggestion on my laptop, was open, and I was mindlessly browsing through ties.

After finding a beautiful Ferragamo tie for $300 and adding it to my cart–with little intention of actually buying it, but wishful–Nordstrom recommended that I look at a “similar choice.” A $19 tie from TieBar popped up on my screen, and I realized that it was indeed very similar to the previous tie I had been looking at. The design, the size, and even the material were all very much the same.

I rolled my eyes. Knockoffs. Why would I buy this second-class version of a Ferragamo? I may as well buy a tie at Target (not to knock Target shoppers; they have some amazing dresses nowadays).
Then I stopped.

Why was this $19 tie a “knockoff?” What made it any less worthy than the $300 one? The only major difference, which led to the price gap that influenced my contempt for the TieBar version, was the name stitched into the tag. A name that no one would even see. I had valued the ties based on the name and the price that went along with each.

In his book Predictably Irrational, Israeli author and sociologist Dan Ariely discusses many human behavioral patterns that don’t fall into the category of pure logic. One of the chapters, entitled “The Fallacy of Supply and Demand,” discusses a concept called arbitrary coherence. When we–human beings, I mean–see a price fixed to something, we assume that the item is worth that much. If that number is stuck to that bracelet, it must be valuable enough that someone is willing to pay that price for it. Therefore, that price must be what it’s worth. We wouldn’t know how arbitrarily a number was assigned to an item; all we know is what we see and are told. We follow the crowd and presume that others’ choices have merit on which to base ours.

A famous example of this phenomenon is the value of the black pearl. There was a clever businessman who realized that people were clamoring for gleaming white pearls, while there was a practically infinite number of black pearls in supply, and no market for them at all. This man brought these cheap, disregarded pearls to his friend Harry Winston. The jeweler made a piece featuring the black pearl, surrounded by diamonds and an expensive setting. Soon enough, black pearls were being worn on the necks of Winston’s clients down Fifth Avenue, in their penthouses on Park Avenue, and to every high-class event on the Upper East Side. The trend trickled down to the masses, and soon black pearls occupied a position of status in the jewelry world. What had once been in ready supply was now in high demand, thanks to the deceptive principle of arbitrary coherence.

How much better is “better quality” in clothing, or anything else, we regularly shop for? How much is that difference worth to us? Are we really evaluating items based on material and durability, or based on what we’re told to get? One little label stitched into a tag can change our whole perspective on an item. At a certain point, we have to draw the line and see where we’re getting the best deal, and where we’re falling into a consumer trap. I know it’s something that I certainly have to work on.

This doesn’t mean that there’s nothing to name brands. It’s reassuring to know that you are getting the best quality possible, even if it’s expensive. Designer clothing also keeps you in on the current trends; when you shop designer, you stay ahead of the fashion game. At a certain point though, we have to stop and think. Are we really getting what we’re paying for?

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