#2. Being Cynical About Other People Costs You Money
We can't deny that people can be pretty dumb. Like Tommy Lee Jones said in that movie about aliens, "A person is smart. People are dumb, panicky, dangerous animals, and you know it." But what if this is all backward? What if most of the terrible financial decisions we make in our lives could be avoided if we just listened to the random assholes around us instead of trusting our own individual brilliance?
"Why would I want to invest in this Google thing when I've still got all my AltaVista stock?"
This isn't a new idea. Back in 1907, a mathematician named Francis Galton asked a bunch of people to guess the weight of an ox. Most were off, and some were way off. But, as a crowd, they nailed it: The average of the entire crowd was off by less than 1 percent. The hive mind was smarter than the individual.
And that attention whore of an ox was the smartest of them all.
And consider a game of Who Wants to Be a Millionaire? The game would be a lot easier if you could just use the audience lifeline on every question -- the audience picks the right answer 95 percent of the time. Of course, some smart people have pointed out that the accuracy of the crowd decreases as the questions get harder. But they also point out that this can be remedied with a smaller pool of smarter people.
The point is that we value our own gut a little too much, and the wisdom of the horde not nearly enough. Especially when we think that we're the expert about, say, the awesomeness of the brands we buy. The principle is known as the endowment effect; we are more willing to value something once it's been established as ours, regardless of what those dumbasses at the office say about it. So, let's say you own a Mac (or a pair of Doc Marten boots, or a Buick sedan, whatever). You're more likely to think your brand is the shit, regardless of how it actually performs or what other people tell you about how much they like the competing brand.
As evidenced by the thousands of lives lost in battle during the Cola War of the 1980s.
This has a monetary consequence: Namely, that brand loyalty costs you money out the ass. Or as one study found, "Loyal Buick customers paid $1,051 more on average than customers who switched from another make to Buick. Even more striking: Mercedes 'loyalists' paid an average of $7,410 more for their new cars than buyers who switched to Mercedes from another make."
And it doesn't matter if the person trying to give us information is an expert and we're a layman. Research has found that you can, for example, manipulate whether or not subjects believed in global warming just by turning up the heat in the laboratory. Mountains of data mean nothing; we insist on going with our "gut."
#1. Your Personal Information Is Worth $81 to Facebook Alone
Ever wonder where Facebook gets all its money from? Think about that for a moment. They're not selling anything, and they're not huge on ads. And yet the company is worth billions. Why?
The answer is juicy, juicy information. It turns out that what companies buy from Facebook is you. Facebook is selling your life for billions of dollars, and you're giving it to them for free.
"To be fair, we did give you Timeline."
We've covered the lengths that Facebook and other social networking sites go to to get us to stick around. And that makes sense, because you're a money machine even when you're not buying anything. That's because social networking is essentially a massive, hugely comprehensive marketing survey. Every time you click "like," share a link, join a fan page or even make a friend, you're generating a suite of statistics that corporations will sell their left nut to get hold of.
To put a real dollar value on it, based on Facebook's filing before its stock went public, The Wall Street Journal estimated that each profile page was worth about $81, each friend was worth about $0.62 and each "like" was worth about $0.03. Stretch that out across Facebook's billion or so users, who spend a total of 9.7 million minutes a day on Facebook actively adding information.
"Shit, this changes everything we knew about her."
Given that the federal minimum wage is $7.25 an hour, this means Facebook receives about $1.2 million a day in free labor, creating what The Wall Street Journal calls "the largest unpaid workforce in history." Though "unpaid" may not be accurate, since most of us are browsing Facebook at work anyway. So we suppose it's really our employers that Facebook is screwing.
Chris Zeigler blogs about superheroes and ethics for Subculture for the Cultured. He'd like to thank Aviva Westheim for editing.
For more things that were actually really valuable, check out 5 Pieces of Junk That Turned Out to be Invaluable Artifacts and 5 Ingenious Contraptions Built Out of Nothing But Garbage.