Alchemy - Rory Sutherland

1. The opposite of a good idea can be a good idea

   1. Logic requires that people find universal laws, but outside of scientific fields, there are fewer of these than we might expect.

   2. Does an increase in tax make you work harder due to less income, or work less because the return for your hard work is lower?

   3. Luxury goods would be destroyed if they were too widespread - no one would want a designer bag that was owned by 5 million other people. On the other hand, many foodstuffs are popular only because they are popular.

2. The Human Code

   1. "The trouble with market research is that people don't think what they feel, they don't say what they think, and they don't do what they say."

   2. When asking others, they would deny normally paying $5 for a coffee, but if you put a fancy green logo on a paper cup so they could display it to everybody as they walk into the office then they might be interested.

   3. One must ignore what people think, but appeal to what they feel.

3. Unconscious Motivations

   1. Just because there's a rational answer to something, it doesn't mean that there isn't a more interesting, irrational answer to be found in the unconscious.

   2. Why do people mostly buy ice cream in the summer? One might think that it is obvious: To cool down on a hot day.

      1. But human behavior gives a different answer. Sunshine is a better predictor of ice cream sales than temperature.

4. How you ask the question affects the answer

   1. One of the great contributors to the profits of high-end restaurants is the fact that bottled water comes in two types. Waiters ask "still or sparkling", making it difficult to say "just tap".

   2. "The way a question is phrased is itself information" - Nassim Taleb

5. The Doorman Fallacy

   1. Everyone spends so much time trying to optimize costs, time and improve overall efficiency. But they ignore several other key aspects.

   2. Hotels may save costs by replace doormen with automatic doors. But they failed to recognize that the doorman had several other functions: Taxi-hailing, security, customer engagement etc. They might be able to charge a higher price with a doorman .

6. Value is in the mind and heart of the valuer

   1. Value resides not in the thing itself, but in the minds of those who value it.

   2. In 19th century Prussia, the royal family needed to fund the war against France. They encouraged wealthy and aristocratic women to swap their gold ornaments for base metal. In return they were given iron replicas of the gold items they donated, stamped with the words (translated) "I gave gold for iron". This then improved status more than just owning gold, as it showed generosity as well.