This article originally appeared on CoreyPadveen.com.
The sharing economy has experienced explosive growth, and while it might be largely self-serving on an individual level, it has created an environment that betters the greater good.
Welcome back to a new edition of my study of the rise of utilitarianism in decision making processes and economies adopted by the modern consumer (often referred to as millennials, but that’s not giving modern consumers enough credit). In this article, I plan to explore some of the inner workings of the sharing economy on both a micro and macro level, as well as the motivations behind its incipience and rise, in order to further along my assertion that utilitarianism and economic utility both play a role in modern consumer behavior.
Let’s start by first defining and explaining the sharing economy, and looking a little more closely at its history.
The Sharing Economy
For a fairly comprehensive look at the history of the sharing economy as we understand it today, take a look at the Wikipedia entry. For our purposes, I’ll simply discuss some economic- and social-based roots of the sharing economy’s rise.
The sharing economy refers to businesses and markets that have emerged as a result of consumers sharing resources, rather than focusing on individual ownership. A couple of well-known examples include Uber and Airbnb, which deal with transportation and real-estate, respectively. In the world of virtual sharing economies, cloud storage or P2P (peer-to-peer) file sharing services, including open source software platforms, are other popular examples of the sharing economy. The rise of these services and the significant expansion of this economy as a whole (I say expansion because sharing was not invented by the web) has its roots in Victorian England in a theory proposed by economist William Forster Lloyd.
Lloyd’s theory, which is often referred to as the tragedy of the commons, suggests that when users with access to a particular resource act according to their own self-interest with regards to consumption, they ultimately hurt the greater community as a whole. The resources in question are used and depleted at a faster rate and provide less utility to each individual than if the resources had been used for the entire population. This can be applied to virtually any situation, and it often is, but in our case, we’re looking at how this concept applies to the rise of the sharing economy in the context of the Great Recession in 2008.
There weren’t too many people unaffected by the housing (and many other) market collapse in 2008. Cutting costs or pulling in some extra cash was a pursuit of many. Combine this with the growth of access to high-speed internet and the prevalence of web-enabled mobile devices, and a new kind of sharing economy came into existence. In this case, consumers would use their access to the internet to share assets, cut costs on things like utilities and services and offer up free time or expertise for an extra few bucks, far below market prices. Thus, the modern sharing economy was born. So, how exactly does the sharing economy relate to the ideas of utilitarianism or economic utility? Those have to do with the macroeconomic and microeconomic motivations of society and the consumer, respectively.
Macro Motivations of Society
When it comes to utilitarianism, the tragedy of the commons helps explain a lot of the economic forces (Invisible Hand-style) at play, which led to the rise of the sharing economy. When individuals act selfishly, hoarding resources and consuming as much as they can on an individual basis, society as a whole is worse off from a utility standpoint. Think about cars in Manhattan. There are a lot of them. Those cars create traffic, that traffic creates pollution, pollution hurts the city (and the world, but let’s focus on Manhattan), people get sick, they can’t work, they lose their cars because they can’t afford to keep them, etc. etc. This isn’t going to be the case for everyone, but we’re looking at this from an economist’s viewpoint, so we need to look at a full cycle. In the case of every individual using his or her car, this is the potential long-run impact the practice can have on the economy and its players.
Now, if we decide to introduce a ride-sharing service, such as Uber or Lyft, that can mean fewer cars on the road, and a lowered risk of the above-mentioned cycle taking place. Scale that, and you find yourself and society as a whole much better off than if every individual acted in his or her own self-interest by hoarding a resource that could easily be shared. Utilitarian ethics apply here, because we have seen an explosive rise of the sharing economy when it comes to car- and ride-sharing services. This has been championed largely by millennial consumers who have grown up engaging and transacting business on a mobile device and online. So, it would stand to reason that the actors are, individually, acting in accordance with utilitarian principles driving their decisions. When we take a closer look, however, we notice that this might not be the case.
(Seemingly) Selfish Motivations of the Individual
Every month, you pay for your cell phone, your internet, and other utilities and services that you consume individually. Let’s say, for argument’s sake, that these services cost you $100 every month. Now, let’s say that you find out that the three other people on the floor of your apartment complex are also all spending $100 every month and receiving the same services, from the same provider. You realize that you could pool all of these together and pay for one, upgraded service for all four of you, and your individual fees would drop to $60 each. In doing so, you could now spend less and consume more, thereby maximizing your economic utility. Great!
Companies like Fon in the United Kingdom offer exactly this service. These kinds of resource sharing businesses have been sprouting up more often in recent years, particularly since the crash in 2008. In the case outlined above, your motivations for sharing access to a resource with other parties are largely rooted in self-interest; you can minimize costs and maximize returns. That motivation doesn’t exactly have its roots in benefitting the greater good. The utilitarian component, in the case of the individual decision to pursue this structure, is a byproduct, not a deciding factor. Egoism (from a philosophical standpoint), to an extent, is the driving force behind the suggestion. And yet, when we take a step back we see that society as a whole is better off. Looping back to the structure of the macro example in the last section, now each tenant has more money, will be able to use that for other resources, such as gas if they drive, will not lose their job, be homeless, etc. etc. Again, this is an extreme case of analysis, but it’s worth using to make the point.
The sharing economy has benefitted society greatly. It has provided solutions to problems that consumers did not even know they had until alternatives were presented. On an individual level, the sharing economy helps consumers maximize their economic utility. Contrary to how this maximization pursuit usually turns out, the result is that we are all made better for it.
8 Easy SEO Tips to Boost Your Ranking
/by Corey PadveenUse 8 Easy SEO Tips to Boost Your Rank
If you are like the many people who try to rank their content on the first page of Google and the other top search engines, you could be wondering what steps will improve your odds of success. Trying to do search engine optimization without putting in the effort to follow the correct path will cause you to waste time and energy on an approach that won’t work. If you learn effective tips and follow each step, you will be pleased with the outcome.
Discover Winning Keywords
Some people make a list of random keywords related to their business without doing keyword research, and you don’t want to make that mistake. You must target keywords that indicate buyer intent if you don’t want to waste your time. People looking for reviews or price comparisons are in the late stage of the buying process, and going after the right keywords will let you get their attention.
Keyword competition is another factor you need to consider when you use SEO. If you enter your desired keyword into Google and find several news sites or other authority domains, ranking for that term will not be easy. Keywords that produce random blogs and websites won’t be too hard to rank, and you can enjoy some success within the first few weeks.
Focus on Engagement
Focusing on engagement is a smart move when your mission is to improve SEO as soon as you can. Too many marketers and business owners only pay attention to their keywords, but that oversight will harm their bottom line.
Inability to produce engaging content will reduce your odds of getting your message to appear on Google, but it will also make your content boring. Writing with an active voice and using terms and phrases to which your prospects can relate will improve your engagement and help you rank. Use short paragraphs and subheadings to make each article easy and fun to read, and you will notice the difference. No matter what you would like to achieve, keeping your prospects’ needs near the front of your mind will take you far.
Increase Article Length
You likely create blog posts and articles containing between 300 and 600 words, which is a good place from which to start. But if you want to improve SEO, you need to make your articles a little longer. Content with 1,000 to 2,500 words will outrank short articles and send plenty of people to your website before you know it. Writing long articles will take some time, but the rewards are worth the dedication.
Enhance Your Website’s Speed
Some people only work on their articles and off-site factors when they want to rank on the No. 1 page of Google, but they are making a mistake. The loading speed of your website plays a role in the rank you can expect, so you can’t afford to overlook that fact if you would like to get long-term results. You can take your loading speed to the next level by optimizing your code, removing unnecessary pictures and upgrading your hosting package.
Target Topics
Using keywords as the main focus of your content won’t get your website or blog to the first page of Google. You can combat that problem by targeting topics related to your desired keywords, and you will get much better results. Use the main keyword to generate topic ideas for your next article, and you can then include other keywords related to your topic.
Focus on Quality Backlinks
Quality backlinks from authority domains are vital for anyone who wants to use search engine optimization to grow and expand a business. Writing guest posts for popular bloggers in your industry is a powerful way to get a few backlinks that will boost your rank. If you want to take this tip to the next level, look for press release companies that have high standards.
Use Local SEO
Local search terms have a lot less competition than broad keywords that appeal to people from all locations. While local businesses commonly take advantage of this method, large chains and corporations can also benefit. Write keywords that target major cities around the nation, and you won’t be disappointed.
Final Thoughts
Even though search engine optimization comes with a range of challenges and setbacks, you can simplify the process by using the right tips. You can use a winning blueprint to rank your content in no time, and you will smile when you see what it can do for your profit. The best keywords will get you moving on the right path, but building quality backlinks and improving your website’s speed will enhance your results. The rank of which you have been dreaming is not as far as you might think, and you can take the critical first steps right away.
So Apple is Slowing Your iPhone
/by Corey PadveenApple has confirmed that older iPhones are running slower than new ones following the release of a new iOS.
You’ve probably heard the news that Apple iOS updates do, in fact, slow down old iPhones. This confirms a theory that began circling earlier this year as people noticed that with the release of new devices, old ones seemed to be working much more slowly (particularly after an update to the operating system). Apple has provided a fairly straightforward explanation, detailing the deterioration of lithium-ion batteries and how this slowing of the system helps keep the battery life intact, but the question still remains: why would they keep this a secret?
What Got People Talking
When this theory first began making the rounds, the hypothesis was that iPhone was intentionally slowing down older devices following the release of a new device in order to push people to upgrade their phones. This seemed pretty devious, but not at all out of the realm of possibility. At the end of the day, Apple lives and dies by its sales numbers, like any other company, and if they could find a way to manipulate sales, we wouldn’t put it past them to do so. That’s one of the big differences with Apple devices and Android. Unlike Apple, which controls both the device and the software, Android is (in most cases) operating independently of the hardware onto which it’s installed.
With that in mind, the conversation picked up steam over the past few months and the focal point was that Apple was deceiving customers and, ironically, downgrading the performance of older hardware with every software upgrade. Now, having reached a boiling point, Apple has been forced to respond.
What Apple Has Said
On Wednesday, Apple released the following statement:
At its core, this is a fairly simple and understandable explanation. The trials that exist with lithium-ion batteries are no secret. Battery life is also something that consumers have noted as an issue in the past, so it would make sense that slowing the performance of hardware that is not built to run more advanced software would help with battery issues. But the issue here is not with Apple’s justification, it is with how they have handled this situation.
Too Late to Apologize?
Call it vanity, call it hubris, call it whatever you want, but Apple has shown time and time again that it is loathe to admit failure. Silicon Valley has largely adapted the concept of ‘Fail Fast, Fail Often’ or, in the case of Facebook until a few years ago, ‘Move Fast and Break Things’, but Steve Jobs was a notorious perfectionist. Apple’s culture (and Board, I presume) would not allow a representative to stand on the world’s stage and talk about software updates hindering the performance of old devices.
It also would not sit particularly well with iPhone owners to hear that the jokes that are often made about a phone being worthless within minutes of its purchase as upgrades are already being released to be completely true. In other words, Apple likely didn’t want to hop on stage at one of their conferences and say: “You have no choice but to buy this new phone for $1,000 even though yours is working fine, because soon it won’t.”
So instead of sharing with the world this bit of (fairly pertinent) information, Apple kept it quiet. Now, in the modern age of information sharing, there really isn’t much worse for a brand’s image than when consumers uncover the truth and expose an issue a brand has been trying to hide. That makes it virtually impossible for anything the brand says after the fact to be taken well. It falls very much into the category of ‘You’re Only Sorry Because You Got Caught’, which is nothing to be proud of. There is also the issue that Apple’s explanation, while believable, is going up against the widely believed theory that this is a sales tactic used to push iPhone owners to buy a new device as the old phones function at a fraction of the speed. That’s a hard opinion to shake, particularly when consumer trust in brands has been on a steady decline in the new age of information.
Will this hurt Apple? Probably not. Apple’s has built a strong enough base of loyalists and a good enough product that there is little they can do to ruin their brand value. Will this teach them a lesson? One hopes, but again, admissions like this aren’t decided by a virtuous employee, they are decided by a series of stakeholders and analysts running meticulously designed cost-benefit analyses.
Long story short: expect nothing to change.
Understanding Google Algorithm Updates in 2018 [Infographic]
/by Corey PadveenIn order to improve your search rankings, it’s important to completely understand Google algorithm updates and how they impact search rankings.
It’s Google’s world and we’re just living in it. While that might be a bit of an exaggeration, when it comes to search, that statement holds true. Marketers are all desperate to improve search rankings, and to do that, we need to carefully study and understand Google algorithm updates. Thanks to Miller Media Management, that task has been rendered pretty simple with the help of this infographic outlining what most of the major updates do to your rankings. Have a look and improve your understanding of Google algorithm updates as we head into 2018!
Marketing with AI [Infographic]
/by Corey PadveenThe world of marketing is constantly changing, and one of the most valuable changes when it comes to effective targeting is marketing with AI.
Artificial intelligence can mean a lot of things. Much in the same pattern as the term ‘social media’, the term ‘artificial intelligence’ has come to mean both everything and nothing. Artificial intelligence comes in many shapes and sizes and exists in both extreme and mild cases, but one of the areas that should excite marketers the most is the idea of marketing with AI.
The folks over at Marketo have put together an infographic that highlights some of the exciting ways marketing with AI already exists, and some of the ways in which artificial intelligence will work its way into the marketing mix.
Take a look at the infographic below!
How the New Twitter Character Limit Offers New Business Opportunities
/by Corey PadveenThe new Twitter character limit (280; double the previous limit) and their business offering is trying to attract a new advertiser.
It’s no secret that Twitter has had its fair share of issues when it comes to sustaining profitability – even steady revenues. For advertisers, there is plenty to love when it comes to Twitter (like TV targeting, for example) but there has always been a certain evergreen element missing when it comes to the microblogging platform; a certain je ne said quoi, if you will. On this week’s earnings call, it seemed like Twitter had finally offered a relatively new and unique solution to their revenue woes, largely having to do with the Twitter character limit.
What Is Twitter Offering?
Make no mistake: Twitter has tried and failed plenty of times in the last few years to attract advertisers the way that Facebook did. There have been unique structures, mobile-specific options (before Facebook commanded the mobile space) and omni-channel approaches (think Twitter TV targeting) that have all underperformed (even though some of them could have been game-changers had they been approached differently). But the current bilateral approach (or, rather, pivot) might be Twitter’s most ambitious strategy yet to attract paying customers.
Despite some of their innovative moves (again, I refer back to TV targeting, which I still maintain has huge upside when done properly) Twitter has not been a favorite for the casual advertiser. The network does, however, have a major asset of value, and that’s an algorithmic feed. In its nascent stages, marketers were fearful that this meant a major decline in organic reach, similar to what happened with Facebook. They were correct, but it has taken until now for Twitter to realize how to capitalize on this asset.
Now, Twitter is offering a monthly subscription plan for businesses and longer character limits. This presents a new opportunity for advertisers that don’t necessarily want to run a full-scale campaign but want more impressions on their important, business-driving messages.
How Can Businesses Use this Service?
With Twitter’s algorithmic feed, organic reach for businesses saw a predictable decline. By subscribing to this service, tweets can now reach a greater number of users without having to spend the time (and individual campaign budgets) building a campaign. Combine that with the ability to say more in a given tweet, and there is a lot that businesses can like.
With the right messaging structure for longer tweets, a fairly significant amount of information can be shared; just think about how much people were able to say in 140 characters. Doubling that means that you can really showcase your insights or share information about your business, and you don’t need to go too deep into the sales pitch as you might have considered with a paid campaign. This means a more natural, conversational style of content creation, and with the subscription service, a greater reach for those tweets and no need to pay on a cost-per-click basis.
What do you think about the new structure being offered by Twitter?
More Bad News for Snapchat [Infographic]
/by Corey PadveenThings have been tough for Snapchat lately, and recent data shows that things are going to get tougher.
Instagram Stories arrived on the scene with a bang and has shown no signs of slowing since its launch. That has consistently spelled bad news for Snapchat, which seems to struggle more and more against the Facebook product every week. Now, new data from Mediakix shows that influencers are abandoning Snapchat for Instagram, and not in small numbers. Top influencers registered a roughly one-third drop in the frequency with which they post Stories. They’re moving over to Instagram for that. Take a look at the infographic below to see more data and get a better sense of how these two platforms are competing.
Rising Utilitarianism in Decision Making: Cause Marketing
/by Corey PadveenThis article originally appeared on CoreyPadveen.com.
More so than ever before, we are seeing businesses adopt causes as core components of both their business and marketing strategies.
Cause marketing is nothing new. Examples of truly integrated cause marketing go as far back as the 70s. What we’re seeing today, however, is a shift in the way causes are being integrated into the missions of businesses; this holds particularly true for businesses that try to appeal to millennials (and often succeed). Let’s start with first taking a look at what exactly cause marketing is and how it falls into the discussion of utilitarianism in decision making.
(Modern) Cause Marketing: What is it?
Almost immediately, I’m sure, most people jump to the idea of defining cause marketing as the concept of brands teaming up with a particular charity or non-profit for a given campaign where “a portion of the proceeds…” – you know the rest. While that is one definition of cause marketing, I would like to look at a somewhat more modern approach, which has seen a rise in recent years.
The definition I would like to consider for the examination of how cause marketing highlights utilitarianism in the decision-making process is one where brands do not simply partner with a cause for a particular campaign, but rather adopt the cause themselves, creating an inextricable link between the brand and the cause itself. This is to say that in lieu of a third party partnership, the cause is the brand and the brand the cause. Don’t get me wrong – there is nothing better or worse than those third-party partnerships. For the case of this argument, however, I would simply like to look at the brands that have made their for-profit businesses cause-centric, and how this strategy has paid off.
One of the most notable examples, and one that I make reference to in my book, Marketing to Millennials for Dummies, is TOMS shoes.
TOMS shoes is by no means the first company to align with a cause. They did, however, approach their alignment is a unique way. Instead of donations in cash from each sale, TOMS offers up their ‘one for one’ structure, where they donate a pair of shoes to those in need for every pair sold. The costs of production and logistics are factored into the cost of each pair, and they make that very clear in their mission statement. As opposed to consumers – a huge portion of whom are millennials – shying away from an overtly inflated price tag, they happily pay for the price of two when they are getting one. (Yes, I know that simplifies the whole transaction a little bit, but you understand my point, I hope.) It is in this willingness to buy TOMS over simple, less expensive alternatives that we see utilitarianism poking through.
An Example of Utilitarianism and Economic Utility
By now (if you’ve been following this series of articles) you already have a pretty good grasp on what exactly constitutes utilitarianism, so in the case of cause marketing, it should be pretty obvious.
Utilitarianism has everything to do with making the decision that benefits society as a whole. In this case, we’re talking about the consumer’s decision to buy a product from one manufacturer over another based on its alignment with a particular cause. As much as it may seem contrary to what the majority of societal assumptions suggest, in the case of millennials, this might mean spending more for a product based on the company’s alignment with a given cause. Most marketers’ definitions of millennials focuses intently on their unwillingness to spend. When looking at the actual data, however, we see that certain instances, like those involving cause marketing, lead to a higher transactional spend and lifetime value.
A point that I have regularly reiterated is that millennials, and modern consumers in general, weigh the overall economic utility of their purchases when making a purchasing decision. When it comes to brands that have involved themselves in cause marketing, there is a greater economic utility for the consumer, since the purchase, however much more expensive provides them with the knowledge that the transaction wasn’t simply fleeting, but rather ongoing. They are getting more out of the transaction based on the knowledge that it also involved a cause. In the case of other causes, such as the checkout dollar donation, the transaction feels separate. As a result, it doesn’t have the same added value to modern consumers as the integrated cause marketing, as is the case with TOMS. As a result, this new form of cause marketing resonates significantly with modern marketers, and showcases a clear example of utilitarianism and economic utility melding together, once again, to highlight the new means of consumer decision-making.
Rising Utilitarianism in Decision Making: The Sharing Economy
/by Corey PadveenThis article originally appeared on CoreyPadveen.com.
The sharing economy has experienced explosive growth, and while it might be largely self-serving on an individual level, it has created an environment that betters the greater good.
Welcome back to a new edition of my study of the rise of utilitarianism in decision making processes and economies adopted by the modern consumer (often referred to as millennials, but that’s not giving modern consumers enough credit). In this article, I plan to explore some of the inner workings of the sharing economy on both a micro and macro level, as well as the motivations behind its incipience and rise, in order to further along my assertion that utilitarianism and economic utility both play a role in modern consumer behavior.
Let’s start by first defining and explaining the sharing economy, and looking a little more closely at its history.
The Sharing Economy
For a fairly comprehensive look at the history of the sharing economy as we understand it today, take a look at the Wikipedia entry. For our purposes, I’ll simply discuss some economic- and social-based roots of the sharing economy’s rise.
The sharing economy refers to businesses and markets that have emerged as a result of consumers sharing resources, rather than focusing on individual ownership. A couple of well-known examples include Uber and Airbnb, which deal with transportation and real-estate, respectively. In the world of virtual sharing economies, cloud storage or P2P (peer-to-peer) file sharing services, including open source software platforms, are other popular examples of the sharing economy. The rise of these services and the significant expansion of this economy as a whole (I say expansion because sharing was not invented by the web) has its roots in Victorian England in a theory proposed by economist William Forster Lloyd.
Lloyd’s theory, which is often referred to as the tragedy of the commons, suggests that when users with access to a particular resource act according to their own self-interest with regards to consumption, they ultimately hurt the greater community as a whole. The resources in question are used and depleted at a faster rate and provide less utility to each individual than if the resources had been used for the entire population. This can be applied to virtually any situation, and it often is, but in our case, we’re looking at how this concept applies to the rise of the sharing economy in the context of the Great Recession in 2008.
There weren’t too many people unaffected by the housing (and many other) market collapse in 2008. Cutting costs or pulling in some extra cash was a pursuit of many. Combine this with the growth of access to high-speed internet and the prevalence of web-enabled mobile devices, and a new kind of sharing economy came into existence. In this case, consumers would use their access to the internet to share assets, cut costs on things like utilities and services and offer up free time or expertise for an extra few bucks, far below market prices. Thus, the modern sharing economy was born. So, how exactly does the sharing economy relate to the ideas of utilitarianism or economic utility? Those have to do with the macroeconomic and microeconomic motivations of society and the consumer, respectively.
Macro Motivations of Society
When it comes to utilitarianism, the tragedy of the commons helps explain a lot of the economic forces (Invisible Hand-style) at play, which led to the rise of the sharing economy. When individuals act selfishly, hoarding resources and consuming as much as they can on an individual basis, society as a whole is worse off from a utility standpoint. Think about cars in Manhattan. There are a lot of them. Those cars create traffic, that traffic creates pollution, pollution hurts the city (and the world, but let’s focus on Manhattan), people get sick, they can’t work, they lose their cars because they can’t afford to keep them, etc. etc. This isn’t going to be the case for everyone, but we’re looking at this from an economist’s viewpoint, so we need to look at a full cycle. In the case of every individual using his or her car, this is the potential long-run impact the practice can have on the economy and its players.
Now, if we decide to introduce a ride-sharing service, such as Uber or Lyft, that can mean fewer cars on the road, and a lowered risk of the above-mentioned cycle taking place. Scale that, and you find yourself and society as a whole much better off than if every individual acted in his or her own self-interest by hoarding a resource that could easily be shared. Utilitarian ethics apply here, because we have seen an explosive rise of the sharing economy when it comes to car- and ride-sharing services. This has been championed largely by millennial consumers who have grown up engaging and transacting business on a mobile device and online. So, it would stand to reason that the actors are, individually, acting in accordance with utilitarian principles driving their decisions. When we take a closer look, however, we notice that this might not be the case.
(Seemingly) Selfish Motivations of the Individual
Every month, you pay for your cell phone, your internet, and other utilities and services that you consume individually. Let’s say, for argument’s sake, that these services cost you $100 every month. Now, let’s say that you find out that the three other people on the floor of your apartment complex are also all spending $100 every month and receiving the same services, from the same provider. You realize that you could pool all of these together and pay for one, upgraded service for all four of you, and your individual fees would drop to $60 each. In doing so, you could now spend less and consume more, thereby maximizing your economic utility. Great!
Companies like Fon in the United Kingdom offer exactly this service. These kinds of resource sharing businesses have been sprouting up more often in recent years, particularly since the crash in 2008. In the case outlined above, your motivations for sharing access to a resource with other parties are largely rooted in self-interest; you can minimize costs and maximize returns. That motivation doesn’t exactly have its roots in benefitting the greater good. The utilitarian component, in the case of the individual decision to pursue this structure, is a byproduct, not a deciding factor. Egoism (from a philosophical standpoint), to an extent, is the driving force behind the suggestion. And yet, when we take a step back we see that society as a whole is better off. Looping back to the structure of the macro example in the last section, now each tenant has more money, will be able to use that for other resources, such as gas if they drive, will not lose their job, be homeless, etc. etc. Again, this is an extreme case of analysis, but it’s worth using to make the point.
The sharing economy has benefitted society greatly. It has provided solutions to problems that consumers did not even know they had until alternatives were presented. On an individual level, the sharing economy helps consumers maximize their economic utility. Contrary to how this maximization pursuit usually turns out, the result is that we are all made better for it.
The Unintended Rise of Utilitarianism in Decision Making (Part 1)
/by Corey PadveenThis article originally appeared on CoreyPadveen.com.
Whether or not we meant for it to happen, utilitarianism has become a driving factor in the decision-making process.
Millennials are often regarded as being self-absorbed, lazy and entitled. Vanity and the pursuit of perceived perfection have led to the presumption that millennials and, more broadly, the consumer market in general (for the most part) are entirely self-centered. It is easy to see why that way of thinking has become commonplace. All of the superficial elements are there to support the argument. What might surprise you – as it did me – is to discover that consumers are not as self-obsessed as we might think and that when we take into account modern technology trends, consumption habits and general social behavior, we can see that, in fact, quite the opposite is true.
I’m talking about an individual pursuit of utility maximization rooted in the moral base that defines utilitarianism. To explain how I came to this conclusion, it’s going to take a few articles. Over the next few weeks – or months, or years, who knows how much I’ll end up writing – I’ll be gathering my thoughts and covering how these two concepts – that of economic utility maximization and utilitarianism – relate to the various habits of modern consumers. In this first segment, I’ll cover the two umbrella topics that provide the basis for my argument. Let’s first take a look at economic utility.
Economic Utility
What exactly is economic utility? Well, the definition, pulled below from Investopedia, is fairly straightforward:
While this definition is simple enough, the key point of focus needs to be on the concept of value, rather than the tangible transactional details. Exchanging money can be substituted for virtually any type of exchange. The value derived from a transaction is an intangible metric, and in traditional microeconomics, its calculation relies heavily on presumptions made by the economist. Modern behavioral economics, on the other hand, looks at value for what it is: an individualistic motivator that leads largely irrational consumers to improve their economic well-being by choosing an option that leads to the greatest returns. Those returns come in many forms, but the key point to remember is those transactional decisions, on an individual level, are self-serving and aim to derive the longest-lasting dividends.
It is as a result of this concept of economic utility maximization that we get the overwhelming societal opinion that millennials act purely out of self-interest. A 2015 survey by Pew even found that millennials see themselves as self-absorbed a greedy, which you can see in the chart below:
So, on an individual level, based on some of the core constructs of behavioral economics, we are all trying to get the most out of every transaction. The motivation behind our decisions is, rather understandably, to make our lives better in whatever measurement criteria we use to define that metric. Individual economic utility maximization, when trying to understand it from a philosophical standpoint, would fall pretty closely in line with egoism. If that’s true, then this consumer trait and the subsequent actions taken by consumers have the potential to conflict pretty directly with the fundamentals of utilitarianism.
Utilitarianism
Before getting into the specifics of the theory of utilitarianism, let’s take a quick step back and talk about consequentialist ethics. In philosophy, a theory is considered consequentialist when the morality of a decision is determined based purely on the outcome of said action. So, if the consequence of an act is considered good, then the action is right. If the results of an act are wrong, then it is considered bad. Pretty straightforward stuff. Both utilitarianism and egoism are considered consequentialist in nature. The difference, however, is that with egoism, as you saw above, when it comes to economic utility, the entirety of the consequence relies on the outcome for the self. That does not necessarily hold true when it comes to utilitarianism.
The utility in the case of utilitarianism is slightly different than that in economics. In the case of utilitarianism, the outcome of an action needs to provide the greatest good for the greatest number of people. This might mean that a morally right action has a lesser benefit on the self, but the welfare of society as a whole is improved. While there is clearly overlap in these two cases, we can almost certainly think of a nearly endless list of examples where the decisions made under the assumptions of egoism will not necessarily line up with those made under utilitarian principles. Take, for example, the case of Edmond Dantès in Dumas’s The Count of Monte Cristo. Under the guidelines of utilitarianism, Dantès would have shared the treasure he discovered with society so as to improve the well-being of every member of society. His choice, clearly rooted in the morality of egoism, was to keep the treasure in order to improve his own welfare and achieve his goals. There are plenty of cases where this outcome might arise, and this particular example is relevant because it has to do with money – or, in the case of the transactional examples noted in the previous section, it has to do with improving one’s own economic utility.
So, thinking about examples in this way, you can probably see how economic utility, a primary driver of consumers’ decisions (particularly millennial consumer decisions on an individual level) might conflict with utilitarianism. And yet, when we take a step away from millennials’ individual actions and look at the trends, emerging economies and social standards set by the demographic as a whole, then we start to see millennials’ operating under the guise of utilitarian ethics.
Over the course of this article series, I will be looking closely at several examples that showcase this reality, juxtaposed against the perceptions we have about millennials on an individual consumer basis and, hopefully, convince you that the theory is true. Hope you enjoy it!
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