perfect pitch

I am currently engaged in a quest ranging across the greater Los Angeles mall outlets, searching for viable storage solutions. Our downtown loft is lovely, and tres chic, but also a bit lacking in closet space. The good news is, there's an entire industry devoted to manufacturing cheap storage units -- cabinets, bookcases, bathroom etageres -- that one only needs to assemble oneself. I happily ordered a few of them, and the first one (a linen cabinet) arrived today, in its disassembled state. The bad news is, many of the individual parts for such pieces seem to have been assembled by inebriated wild monkeys with poor depth perception and even worse manual dexterity.

Now, I wasn't expecting much in the way of quality materials or craftsmanship, mind you, but I don't think it's unreasonable to expect the shipped pieces to be properly prepared for assemblage. During my poverty-stricken early 20s, while living in dank, cramped spaces with no closets all over New York City, I got pretty adept at putting together such items. So the fact that the "instructions" were presented in broken English with blurry diagrams and a couple of mislabeled parts was just a minor irritation. It was pretty easy to figure things out. What incurred my wrath was the utter lack of quality control when it came to all the in-factory prep work, prior to shipping.

Take the drawers (please!): the pre-drilled holes for the handles on the front didn't line up with said handles. I managed, with a bit of ingenuity, to overcome that hurdle. Then I found that a few of the holes for the cam locks were too small, or had been obscured by a sloppily applied coating of paint. Again, I managed to address the challenge. But my luck ran out when I discovered that the aforementioned drunken wild monkeys had completely forgotten to pre-drill two of the four necessary holes for the cam locks on one of the two shelves labeled "E". And without that shelf "E", the rest of the cabinet cannot be assembled. I was at an impasse, foiled in my mission to achieve proper storage for the guest towels.

Highly irritated, I called the customer service line. The woman was very nice, promptly put in an order for a replacement shelf "E", and offered me a $60 discount on the price of the item. This solution was preferable to undoing the half-assembled piece, repackaging it, and sending it back, so I accepted. But when I tried to cancel the remaining ordered items, the woman offered an additional discount if I didn't do so.  And even though I'd called specifically to cancel the rest of the order, I found myself grudgingly agreeing to give the company another chance and hope for the best with the remaining pieces still to be shipped. Frankly, there's no way in hell the rebates will make up for the aggravation in my near-term future, and yet -- I fell for it. Why?

That's the kind of tricksy, positive spin that typifies successful sales pitches -- a subject featured in a forthcoming new book by Loyola College physicist Joseph Ganem called The Two-Headed Quarter: How To See Through Deceptive Numbers and Save Money on Everything You Buy. It's available for pre-order on Amazon, and no, I don't know Ganem personally, and have no vested interest in plugging his book -- or his blog. I just find the subject fascinating, and especially timely, in these days of mega-defaults on subprime mortgages -- a classic example of bad financial decision-making, with particularly devastating consequences. I have no idea what Ganem's writing style is like, but if the book is at all accessible to a general reader, it should be recommended reading for any American consumer.

Ganem got the idea for the book when he took a closer look at the myriad of credit card solicitations he was receiving as junk mail, offering low introductory rates. But once he'd factored in the transaction fees (cleverly concealed in the fine print), he found that he would be paying about the same under the new card as he would using his old one.

The whole point of a good sales pitch, after all, is to manipulate people with numbers, taking advantage of the fact that most of us are uncomfortable with crunching numbers, yet we have a tendency to place a bit too much trust in them. (Hence the prevalence of frequently unreliable or misrepresented statistics in newspaper articles to lend credence to the topic.) Honestly now, which sales pitch is more likely to convince you to spend money, "buy one, get one free" or "buy two and get 50% off"? The astute reader will note that, in fact, the offers are identical in terms of monetary value. But according to Ganem, most consumers would find the first offer far more appealing.

Ditto for supposed "zero-percent financing" on cars, which is designed to overcome our psychological aversion to losses by presenting a loss into a perceived gain. Your local car dealer might tell you that a car costs $15,000, but you'll get a $2000 rebate if you pay cash up front, so you'll get the car for $13,000.  Take out a loan, and you'll pay the full $15,000, but hey -- he'll throw in zero percent financing for three years. On the surface it seems like a decent deal, especially for cash-strapped folks. But Ganem points out that the car actually costs $13,000, no matter what. You're just paying the $2000 finance charge up front if you take the zero-percent financing loan option.

In his book, Ganem dissects all kinds of examples common to the average consumer, from nutritional labels on food items and "free Internet access" bonus hours, to extended warranties and the stock market. With regard to the latter, he found that the rate of return for the average investor between 1984 and 2003 -- which included one of the strongest bull markets in history -- did not even keep pace with inflation.

Jen-Luc Piquant has always been rather dismissive of the stock market, considering it primarily a more socially acceptable form of gambling -- although these days, with the huge popularity of Texas Hold 'Em at the World Series of Poker, gambling is pretty darn respectable. That doesn't mean it's easy to win, whether it be poker, blackjack, roulette, or the lowly slot machines. According to Ganem, casinos manage to keep raking in the profits because they maintain the three critical conditions for doing so: (1) you must place bets with positive expected values; (2) you must place many, many bets so that the long-term results approach the averages; and (3) you must have a sufficiently large bankroll in relation to the size of the bets placed so that normally occurring losing streaks don't wipe you out. 

(Future Spouse has observed more than once that many players' strategy in poker tournaments is to play very aggressively early on in hopes of catching a big pot and building up their chip stack sufficiently to stay competitive as the blinds get larger and larger -- which is similar to Ganem's third condition. For an amusing account of our recent trip to Vegas, plus a few more personalized "lessons learned," check out Chris Lackner's poker blog, The Persistent Irritation.)

Most of us whose last name isn't Rockefeller find it difficult to meet all three of these conditions on a regular basis. I personally have lost with pocket Queens against pathetically low unsuited, unconnected cards -- more than once. It's hard not to take it personally when one is repeatedly sucked out on the river, but the nature of probability is such that sometimes, the odds won't work out in your favor, even if you start out with the best possible hand (pocket Aces).

Earlier this year, I wrote a short article on Michael Binger, the poker-playing physicist who placed third at the 2006 World Series of Poker. I asked him about the Curse of the Pocket Queens. He blithely rattled off a bunch of statistical probabilities, the gist of which was, even with such a strong hand, there's still something like a 15% chance you'll lose -- unless you successfully force everyone else to fold. (Alas, I lack that particular ability.) But even Binger admits that, while knowing the odds of specific hands is useful, there's no perfect model for winning every time at poker. Psychology plays a role. And so does sheer dumb luck, although Binger claims luck only reigns in the short term. Over the long term, the percentages hold sway -- Ganem's second condition for successful gambling.

The point of all this rambling is that sales people are pretty darned clever when it comes to numbers manipulation. But they don't hold a candle to whoever writes the warranties for the consumer electronics industry. One of my favorite passages in Good Omens -- a classic apocalyptic farce by Neil Gaiman (who also has a blog) and Terry Pratchett -- is a footnote detailing the demon Crawley's admiration for electronics warranties. These warranties (and I paraphrase) expressly state that should the purchase item not work, be missing parts, or even fail to be inside the expensively packaged carton, it is in no way the fault or liability of the manufacturer, and any attempt to prove otherwise will result in a personal visit by stern-looking men in dark suits with briefcases and thin watches, armed with threatening legal documents.

Crawley sends a whole batch of warranties down to the division in hell responsible for writing up the contracts for souls, with a note simply reading, "Learn, guys." Ganem, in contrast, has written an entire book. But we could probably learn quite a bit from his authorial debut, save some money, and make wiser financial decisions in general if we heed his words.

Comments

[Ray]

The most blatant example I recall of a financial sales pitch was one time when I was shopping for a new car. I had almost made my decision, when the sales person asked how I would be financing. When I told him I would be using my credit union, his eyebrows raised in astonishment and he asked me to wait while he got the "finance manager" to come and talk to me.

When said manager arrived, I was utterly blown away by his argument that, even though the interest rate he was offering appeared to be higher than that of the credit union (by about two percentage points as I recall), in fact I would be paying less. When I asked how that could be, his reply was that, while I would be paying the credit union once a week [I have no idea where he got that idea, but by this time I was fascinated], and thus be making 52 interest payments per year, nevertheless he could offer me a plan where I had to make payments only once per month, thus making only 12 interest payments per year. Therefore, I would be paying him less in interest than I would to the credit union. Q.E.D.

Presumably there are people who would be taken in by this, but I simply got up and walked out while they shouted after me something to the effect of "If you leave now, you won't get this opportunity again". Well, thank goodness for that!

[Matt Dick]

The subject of casinos and gambling is endlessly fascinating to me. The most interesting thing is the business model of casinos. As you pointed out, getting the numbers to approach the average is the win that the casinos rely on. Note some time when you are in Vegas how you are forced to enter the gaming rooms in order to get around. There is a very reliable calculation that every body that enters the casino floor is worth $X (X was 10 a few years ago). Even if you have no intention of playing, Harrahs can rely on that very simple calculation -- if they put up false "sidewalk cleaning" signs that force you in the door, they can chalk up $10 of revenue. Casinos are a volume buisiness; they don't care if you put in one quarter and win $10,000. They just made a $10 because behind you 1000 people just walked through the room.

[coturnix]

Happy birthday!

[Paul]

On putting shelves & drawers together, what happened to the nice work bench with drill bits and screw drivers you had in DC. Did you not ship that 'most important' commodity?
It would have been faster than struggle with the lady on the phone and overcome the "inebriated wild monkeys with poor depth perception ".

[doug L]

In your first paragraph regarding your recent encounter with the latest in "do it yourself" furniture you said it was as if "constructed by wild inebriated monkeys with poor depth perception"...In a way that's probably a very accurate description of the workers (we are a kind of monkey to everyone but us) who manufactured the pieces to that "assemble it yourself" furniture. You could have added that they were probably paid a pittance, had no insurance or retirement or education or safety features or adequate ventilation or effective respirators (which makes the liklihood of inebriation a very real one, since most of the product they're making consists of glues, aeorsols and solvents), though maybe their children will (when/if they get old enough to have some of their own). Next time, why not go back over to the jeweller who re-sized your ring and ask if they knows any furniture makers in the arts and craft community (which still exists, y'know) and buy something that you'll be happy to hand down to your kids or somebody's kids. Maybe one of the kids of the girls and boys who manufactured those parts will one day live next door to us...it's becoming a smaller and smaller world.

[Jennifer Ouellette]

Doug, Doug, kindly take a moment to climb down from your self-righteous high horse and lay off the needless guilt-tripping. Please. :) I am hardly insensitive to poor working conditions in third world countries, and if you read my earlier post about the ring carefully, you'd note that I try to support small local businesses when I can. That doesn't mean tolerating poor craftsmanship because of some misguided sense of white liberal guilt. We are all held accountable for the quality of the work we do. Sometimes we fall short. And we suffer the consequences.

As for the monkeys with poor depth perception -- it takes a special kind of mean-spirited mind to twist that into a racist comment and assume that I intended it as an "accurate description" of the workers. Congratulations.