A wine club as an allegory for the fallacies of economic theory.
So I'm subscribed to this wine club. I'll tell you which one later, but I don't want you to run off and try it without reading this post first. Their shtick is that they send you a "tasting kit" first where you rate a bunch of wines, and then they (supposedly) use the results to send you wines that match your taste profile.
The thing I find amusing is that even after having received several shipments of wine, I have no idea if the service is any good and no apparent way of figuring it out, because:
1. I am clueless about wine. The wine they sent seems fine to me, but I have no idea how it might compare to wine I might be getting anywhere else. I only started drinking alcohol of any sort at age 28 and I only started actually liking wine at all maybe two years ago. About all I know about wine classification is the difference between white and red; I honestly have no idea what the difference is between cabernet, merlot, pinot noir, etc. So I can't judge for myself.
2. Any kind of Google search for opinions produces only useless information:
- Extremely positive reviews which are obviously fake/sponsored/native advertising.
- Non-opinionated reviews by "review sites" which merely factually describe the service without stating any sort of opinion. These appear to be largely content farms that have SEO'd their way into the search result list without providing any useful information of their own.
- Extremely negative comments posted by people who insist that the service is a "SCAM" that charges you for wine you didn't ask for. I am not sure what these people thought a "wine club" was, but I thought the pricing structure was laid out very clearly at every step of the process, and I have not received any surprises. So, I can only conclude that these people are complete idiots who type in their credit card number without reading. Of course, these negative comments also often insist that the wine tasted terrible, but what else would you expect when the person is angry and stupid?
So what am I supposed to conclude?
In economist fantasy-land, a service like this that sent poor-quality wine would go out of business, because the information about wine quality would quickly be disseminated and then everyone would know to avoid it.
In the real world, any useful information on quality is thoroughly lost in the noise created by advertising, content farms, and idiots. The only thing people actually know about this service in advance is that they have this elaborate "tasting kit".
In such a real world, the logical strategy to maximize profit is:
- Advertise specifically to people who are clueless about wine. The "tasting kit" thing helps a lot here -- people who know what they like won't care about this kit, but people who don't will love it.
- Make the tasting kit really elaborate to maximize placebo effect.
- Don't actually pay attention to the kit results at all. Just buy up the cheapest wine you can find, relabel it, and ship it out. Your unsophisticated subscribers won't know the difference.
Economists like to imagine that consumers have perfect information about the products they are buying, and then are able to conclude from this that products will have to be good in order to sell. In reality, all too often, it seems we have not just imperfect information, but in fact utterly useless information. Some people -- especially in the advertising industry -- want to describe advertising as a way to make sure consumers are informed and can make good decisions, but in practice it seems the point of advertising is usually to pollute the information well with outright false information.
On the other hand, the thing that often saves us is another fallacy of economics: In reality, many people aren't motivated purely by money. The most brilliant and effective entrepreneurs are often the ones who take pride in their work, and people who take pride in their work generally don't want to sell a bad product that consumers only buy because they've been tricked. Often I think entrepreneurs actually overestimate the importance of product quality because they want to produce a quality product, and when answering a question like "what business direction will be most successful?" -- where there is no obvious "right" answer -- entrepreneurs will settle on the answer they want to be true. And the answer many of them want to be true is: "We'll make the most money by building a good product, not by swindling people."
Of course, there are plenty of people out there who are in fact happy to swindle people, and a spectrum in between. In the case of the wine club I'm talking about -- "Tasting Room by Lot18" -- I'm inclined to think they lean more towards cynically gaming things for profit... mainly because of their excessive use of native advertising, which I find offensive. But honestly, I don't know, and that's a problem (which we aren't likely to solve any time soon).