Invisible Influence (16 page)

These costs reduce the likelihood of widespread adoption. Most people don't have the money to buy a yacht, the time to study Foucault, or the dedication to renounce carbs.

But these costs also have benefits. They distinguish between insiders and imitators. Between people who know or care about a particular domain and people who don't. You can't just hop on a fixie one day and hope to ride it safely. You have to take the time and effort to learn how to do it right.

Same with pronunciation. Take the name Krzyzewski. Try pronouncing it out loud.

For people who are into college basketball, nothing could be easier. You recognize it as Mike Krzyzewski, coach of the Duke Blue Devils. And you've heard it pronounced hundreds of times by various announcers and friends who either like or hate the team.

But for people who don't follow college basketball, pronouncing the name is like a tongue twister. You have to sound it out letter by letter and end up with something terrible like “Krizz-zee-eew-ski.” (The correct pronunciation is something more like “Sh-sheff-ski.”) To know how to pronounce Krzyzewski, you have to have watched enough college basketball, or hung out with people who do (or speak fluent Polish). And that time requirement is a cost.

Sure, some people would be happy to spend all day watching college hoops. If you told most sports fans that watching NCAA basketball was “costly,” they'd laugh you out of the room. For them it's fun to do.

But not everyone feels the same way. And, regardless of whether you like college hoops or not, the time spent acquiring knowledge in that domain is time that could be spent on something else. So, the time required acts as a cost that separates out those in the know from those who aren't.

Costs also explain why some signals persist. Rather than coming in and out of fashion, why some things stick around.

The more costly something is, the more likely it is to retain its value as a clear and accurate signal. Observers can be pretty sure that someone who owns a yacht is rich and that someone who rides a fixie knows her bikes. Because the more costly something is, the less likely outsiders will be to poach it. And by reducing the likelihood of adoption, costs simultaneously increase a signal's value in distinguishing people who have a certain characteristic from those who don't.

Take Mohawks. Most people would love to seem a little edgy, but they're not willing to shave both sides of their head to do it. It's a jarring look that makes it harder to get a white-collar job and a date. Sure, once celebrities like David Beckham and Cristiano Ronaldo adopted the fauxhawk, a toned-down version of the Mohawk with a smaller spike and no shaved sides, stylish men adopted the cut, but they still weren't willing to go all the way.

And that's why the Mohawk has retained its value as a signal of outsider culture. It's costly enough that mainstream folks won't
adopt it. Costly signals are more likely to persist and maintain their meaning.

As Yvan Arpa, the CEO of the company that made the $300,000 watch that doesn't tell time, noted: “Anyone can buy a watch that tells time—only a truly discerning customer can buy one that doesn't.”

When we asked Matt if he would be willing to fill out a quick survey, he was more than happy to oblige. An undergrad at the University of Texas at Austin, Matt was majoring in communications and hoping to break into the music industry someday. But college was expensive, so he was currently busing tables at a local restaurant to make extra cash. When we offered him $5 in exchange for answering a few questions, he jumped at the chance. He pulled a pen out of his bag, sat down at a nearby table, and started reading the directions:

We are interested in product perceptions. First, please rate how much you agree or disagree with the following statements about fashion knowledge: I know a lot about fashion, I think about fashion often, etc.

Matt didn't think of himself as into fashion. He didn't know much about clothes, never read up on the latest trends, and could care less about the whole thing. The last “fashionable” shirt he bought was one with a weird shiny pattern that his girlfriend made him buy the last time they went to the mall. He circled the “strongly disagree” option for most of the questions and moved on to the next page.

We are going to show you images of various handbags. For each handbag, please write down how expensive you think it is. Next to each picture, write in a dollar amount based on how much you think it costs.

Handbags?
Wow, definitely don't know much about those,
Matt thought. Nevertheless, he gave it a shot.

The first bag had a logo that said Prada on it, and he remembered hearing something about it being a fancy Italian brand. He wrote down $700. Another was covered in Gucci pattern, so he wrote down $650.

Then he got to a third bag. It was gold in color and looked like it was made of some sort of woven material. But it didn't have any logos on it. It almost looked like one of those cheap bags you buy at beach stores to haul odds and ends when you're on vacation.

Matt wrote $20 next to the picture. After thinking about it for a minute, though, that seemed high. He scratched out $20 and replaced it with $15. Then he moved on to the next bag.

Before the Industrial Revolution, most things were made by hand. Families spun their own cotton and flax and wove them together to make their own textiles. Given the difficulty of forming metal parts, any machines that did exist often used wooden components. Work was manual, hard, and often laborious.

With the development of machine tools, the steam engine, and other technologies a slow, steady shift occurred. The flying shuttle, spinning jenny, and other tools allowed weaving to move out of the home and into larger, more dedicated factories. The cotton gin shrank a year's worth of work into a week. Entrepreneurs began to nurture inventors to create new and more powerful machines.

With these technological changes came a new social class. Not only did standards of living increase, so did social mobility. Until then, status had been relatively static. Wealth was hereditary. Titles passed from generation to generation, and with them, the class it conferred. One was a lord because one's father had been a lord, and his father before him. There were those who owned the land, and those who worked it, and the line between these groups proved difficult to cross.

The Industrial Revolution changed that. Money moved from something you either had or didn't, to something that could be acquired. And you didn't have to own land to do it. With the right combination of wits, courage, and luck, one could amass a small fortune in a short period of time. Wealth became decoupled from social class and the nouveau riche was born.

The nouveau riche, or new rich, described the new social class that emerged from the tumult. Rather than inherited wealth passed down from their upper-class families, these individuals had made their own names. Born into the lower social class, their newfound wealth enabled them to consume goods and services once available only to higher-status individuals.

But simply buying expensive goods wasn't enough. The nouveau riche didn't just want wealth, they wanted the status that comes with it. Wealth is often private. No one but you (and maybe your spouse) knows how much money you have in your bank account. Status, however, is social. It is attained in the eyes of others. The respect of one's peers.

So the nouveau riche engaged in
conspicuous
consumption. Rather than just buying expensive food, high-end dishes, or other private items, they purchased consumer goods that displayed their wealth for everyone to see. Buying goods and services not only for their personal value, but as a way of acquiring status and prestige.

Visible signals facilitate identification. You'd have to be pretty wealthy to buy $10,000 toothpaste, but even if you did, almost no one else would know. Cars and clothes are consumed more publicly, however, making them more common carriers of communication.

Brands further facilitate this process through visible logos and explicit patterns. Wearing fancy sneakers with a large swoosh on the side, or an expensive jacket with Burberry plaid, makes it easier for observers to use those products as signals of identity.

One might expect less overt markers, however, for cheaper goods. Sure, people might want to let others know that they bought something from Burberry, but they might be less keen on broadcasting items bought from Walmart. This idea suggests a positive relationship between price and brand prominence. Cheaper goods should have small (if any) logos and more expensive goods have larger, more prominent ones.

But when professor Morgan Ward and I analyzed hundreds of products, we found a different pattern.
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We picked two major fashion categories, handbags and sunglasses, and coded hundreds of examples, noting the price and whether the brand name or logo appeared on the product.

For cheap products, the brand was almost never identified. Only two of every ten pairs of sunglasses cheaper than $50, for example, contained a brand name or logo. As price increased, branding became more prominent. Almost nine out of ten pairs of sunglasses between $100 and $300 were branded. But as price increased even further, branding became less prominent. Only three in ten pairs of sunglasses costing more than $500 had a brand name or logo on them.

Rather than a positive relationship between price and branding, it was more like an inverted-U relationship.

Not surprisingly, the lack of logos made the items (and their prices) harder for observers to identify. When we asked people like Matt to guess the prices of different handbags, logos and other explicit branding made all the difference. When products had large logos, observers had some sense of how much the items cost. They didn't get the prices exactly right, but they could differentiate between more expensive items and less expensive ones. They could tell that the Gucci bag was more expensive than the one from the Gap.

But take away the logos and observers had no idea. They couldn't tell the difference between a $2,000 bag and one that cost only $20.
^II

If people care about conspicuous consumption, why would anyone pay thousands of dollars for something most observers would think is cheap?

One could argue that people buy expensive brands because they are higher quality, but that can't explain the price premium luxury brands charge for less prominent branding. More expensive Mercedes cars, for example, have a smaller emblem on the hood. For every $5,000 increase in price, the logo shrinks by a centimeter. Gucci handbags and Louis Vuitton shoes show the same pattern. Luxury items with less prominent logos are more expensive. Quieter signals cost more.

Do rich people just dislike logos?

While some products scream the brand for everyone to see, other products have signals that are less blatant. Christian Louboutin uses red soles on all of its shoes, and Coton Doux shirts often have a distinctive pattern around the collar or under the cuffs. One leather brand uses a particular crosshatched leather pattern on many of its handbags, tote bags, and wallets.

More obvious brand names and logos more effectively communicate to a broad audience (because they are easier to see and identify), but subtle signals may be missed. Most people don't notice the soles of others' shoes, and understated detailing may go undetected. Such “dog whistle” fashion may fail to be decoded by most observers.

But while this inability to signal widely may seem like a downside, it also has a hidden benefit. Loud signals are easier to identify, but as a result, they're also more likely to be poached or copied by outsiders.

Carrying a handbag that says Louis Vuitton all over it encourages observers to think you're wealthy. But because they're more recognizable, such explicit signals are also more likely to be imitated by people who aren't wealthy, but just want to
seem
that way.

Consider the types of products that tend to be counterfeited. Walk down Canal Street in New York City, or browse websites that specialize in counterfeit items, and not all handbags are represented. Louder bags are more likely to be copied. Bags with larger logos or more explicit branding are more likely to be pirated, because what counterfeit buyers want is the signal. They care less about quality, and more about what the bag communicates.

Consequently, insiders, or people who know a lot about a given domain, prefer subtle signals. They aren't as widely observable, but they help distinguish insiders from wannabes. If people who want to seem rich buy handbags bathed in Louis Vuitton logos, those are no longer a good signal of wealth. So the truly wealthy may diverge and use more discreet markers that only other insiders can recognize.

Even though most people can't recognize them, subtle signals provide a covert communication system with others in the know. Many people would miss Bottega Veneta's pattern, but fashionistas possess the expertise to recognize the understated markings.
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