Monday, August 6, 2012

The Bigger, the Better

Again I failed to resist the temptation of cheesecake and bought a 12-inch one from Costco (I told myself I need some calcium from the cheese.) The first piece did give me high utility, but it soon started to decline since the second one. Looking the rest 14 pieces, I don't know how long it will take me to finish all.

I was warned to order "half size" when dining in the US, which proves to be one of the most useful advice I've received. I don't know whether it's because people here really need that much food, or they simply like big plates and food chunks, restaurants are very generous in feeding you. Every time I have dinner outside, I do try to order "a full set" of appetizer, entree and dessert, but always give up after looking around, seeing how other customers fight against a mountain of food. If an adult only need 2,000 calories per day, they probably only need one dinner to meet the demand. In the end, I always end up with entree only, though fascinated by the inviting descriptions of appetizers and desserts.

The biggest surprise came from Texas. I once transferred in Austin with Gang. It was lunch time, and our flight was not leaving until two hours later, so we decided to grab a quick lunch. I bought two burgers, both of which were about three times the size of McDonald burgers (which by the way is pretty big already.) I brought burgers to Gang, looking as if I was carrying two bricks. We finished less than half of our burgers, and had to throw the rest away.

Businessmen here seem to embrace the idea of "the bigger the better." Bigger packages imply abundance, and no worriment about shortage. When items are sold in big size, the average cost per unit is reduced and customers may mistake it as a good deal. But lured by a deal like this may result in uneconomic decisions:

One concern is the wasting. (Think hard about famine victims in Africa when we talk about this point.) Food go bad if you can't finish them in time, power storage declines if batteries have passed expiration, and clothes can be out of fashion if staying closet for too long. We are sometimes too confident in our consumption capabilities.

The other concern is the negative externality on consumption of other items. For consumers, utility is reduced by the constraint on minimum consumption of each good. Because of the big size of entree, I can't diverse my consumption by including appetizers and desserts. According to economic theories, my utility is not maximized. Economists are always wrong, but this times they are right. For suppliers, they do not de facto sell more by offering larger packages because of the substitution effect. People consume more A at the cost of consuming less B. So if you think of total consumption of different goods, it's hard to tell whether merchants are able to increase sales or not.

Some people are good at consuming and successfully finish everything they have bought. That partly explains why the adult obesity rate increases to 35.7% in 2012 (Source: Centers for Disease Control and Prevention), which is expected to continue rising over and reach 42% in 3020 (Source: fox news). Similarly the energy consumption per capita in the US also ranks No.7 in the world (Source: World Bank) for bigger houses and autos. Encouraged by merchants, people are justified to consume more than needed.

To rescue consumers from the guilt of over consumption, merchants have to further enlarge everything else to match up increasing sizes. One example is the change in clothes size. Banana republic renamed its size 0 with a new size of 00, thus consumers will feel better when they find themselves still able to fit in pants with the same size in spite of overeating. Of course the best solution is to change the definition of "obesity": by raising the threshold, we will find a reduction in obese population for sure.

We probably should be jealous of a country which can squander resources in such a common way. But when the world is facing scarcity, and current consumption level is inconducive to better lives, it is time to rethink of this business tradition.

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