Often We Pay More For The Illusion Of Control

If you want a lesson in the power of custom and pricing psychology winning over objectively better options, check out this New Yorker piece on failed attempts by restaurants to eliminate tipping.

Research conducted by Michael Lynn, at Cornell University, who is the foremost academic authority on tipping, has shown that people of color receive lower tips than their white colleagues, which arguably qualifies tipping as a discriminatory pay practice. The system perpetuates sexual misconduct, because service workers feel compelled to tolerate inappropriate behavior from customers who hold financial power over them. As restaurant prices have risen, gratuities—which are tied to sales, as a percentage—have too, so that there is now a substantial and hard-to-defend disparity between the pay of the kitchen workers who prepare food and the servers who deliver it.

A statistical model created by Ofer Azar…found only a small correlation between tip size and service quality, leading him to conclude that servers were motivated mainly by other factors …Another study by Lynn showed that perceived service quality affected tip size by less than two percentage points. A female server, by contrast, can expect to hike her tips by an average of seventeen per cent if she wears a flower in her hair.

A number of restaurant groups and owners have tried to eliminate tipping to help resolve this issues. Some have decided to eliminate tipping and set their prices higher in order to provide health and leave benefits in addition to a living wage.

While there have been some difficulties finding people who are willing to work in a no-tipping environment, the bigger problem is resistance from customers.

New research by Lynn shows that when restaurants move to a no-tipping policy, their online customer ratings fall. One factor that explains that dissatisfaction is how we, as consumers, respond to “partitioned” prices versus “bundled” prices. A partitioned price divides the total cost of an item into smaller components—say, a television listed for a hundred and ninety dollars that has a ten-dollar shipping fee. A bundled price would list the television, shipping included, for two hundred dollars. Consumers tend to perceive partitioned prices as cheaper than bundled ones.

Later the article notes people have an aversion to service charges. Even though people will typically tip 20%, if a 15% surcharge is automatically added in the place of tipping, people perceive it as a “gotcha” even though it means they will pay less. People also believe that service will suffer in the absence of tips.

There is a lot in this article that speaks to the value of using psychology in pricing strategy and providing the perception of the consumer being in control.

If you have ever shopped on sites like Amazon where there are multiple sellers of an item, if you pay attention you will often see items that are offered a few dollars cheaper than the rest of the group—until you get half way through the transaction and you realize that with the shipping and handling it is much more expensive than the sellers who offered free or included shipping. I often wonder if they are counting on people not noticing or deciding it is more trouble to back out of the transaction and starting anew with another vendor.

Surcharges on ticket sales would likely disappear immediately if the sales weren’t restricted to a single service. (Ticket prices rarely fall below face value on re-seller sites.)

Speaking about the ethics and motivations behind your pricing does gain traction with certain demographics and may make them more willing to pay a higher price if they know people are being taken care of. But this New Yorker story seems to suggest tricks like ending a price with a 9 rather than a 0 will still be a significant motivator of purchasing behavior.

Money May Make The World Go Round, But Education Drives Participation

In a recent “Taking Note”, National Endowment for the Arts’  Director of Research & Analysis,  Sunil Iyengar mentioned that in the coming year the NEA will commission some monographs exploring the role of taste and preferences in arts participation.

He later points out a study conducted in Spain that touches on this very notion.  With the obvious disclaimer that the cultural norms of Spain differ from that of the U.S., I wanted to point out a couple interesting observations the Spanish researchers made.

They categorized study participants as either “absolute” or “recoverable” non-attendees. The absolute non-attendees were those who were “impermeable to cultural policy” and would not attend for any reason whatsoever. Recoverable non-attendees were those who had not attended recently but  shared characteristics with people who did. Among the “recoverable” are people who might have had children and will become increasingly open to participating as their kids got older.

The researchers categorized willingness to attend across cultural events, visits to historic/cultural sites or attend cinema.

In all three cases, education works independently of income, in positively affecting attendance. Even the effect of income on arts participation is shown to be “more significant” for people at the higher versus lower education levels.

[…]

The researchers conclude that as education rises, interest in arts attendance grows dramatically. For example, changing a respondent’s education level from “primary education”-only to “higher education” would cut his or her likelihood of being an “absolute non-attendee” by 50 percentage points—for all three arts activities.

Again acknowledging that Spain and the US are different situations, I was pretty astonished to see a 50% reduction absolute non-attendance closely associated with education level. In the conclusions, the researchers suggest cultural policy should be more closely integrated with education policy with an eye to the way technology changes expectations and mode of content delivery.

What I also found interesting was that income level doesn’t seem to have the same impact on attendance that education does for arts events and cultural site visits. Cinema is more price sensitive.

At the same time, the category of “recoverable non-attendee” (that is, a person who just feasibly might have attended an arts event) remains inflexible when income levels are raised, for both cultural-place visits and live performing arts attendance. The authors thus remark on the “clear polarization” among Spaniards when it comes to either high demand or absolute non-interest in these activities.

The way I read this was that people with high levels of education are more likely to attend regardless of income level. Whereas people of low education level don’t take on the characteristics shared by “recoverable” attendees as their income level rises. The first section I quoted above appears to say people with high levels of education become more likely to attend frequently as income goes up, but people with high levels of education and low income will have a tendency to attend at some point.

I scrutinized the original research report (which is in English) for a plain statement either supporting or refuting my reading of this, but I didn’t find a statement that clarified the matter for me.

What I was ultimately hoping to find was something that showed preference (or lack thereof) shaped by education was a greater barrier to participation than price. This would resonate with recent research results from a number of sources that suggest price isn’t as large a barrier as has been assumed.

A caveat to my caveats: While I continue to assert the differences between Spain and the U.S., the Spanish researchers themselves say their findings match that of U.S. researchers so don’t read my disclaimers as a diminishing the validity of the Spanish research on U.S. behavior.  I am just making it clear that I am not ignoring the distinction.

In the three activities, a very large group of absolute non-attendees is observed that it will be difficult to interest in cultural activities, especially in live performances and sites of cultural interest. This result is very general and similar to that obtained by Ateca Amestoy and Prieto Rodríguez (2013) for the United States.

Has Cost Suddenly Become Less A Barrier To Participation?

Back in October I wrote a couple posts about the newest iteration of the Culture Track report.  The operative word there is iteration. The study is conducted every three years in an attempt to track the shifting trends in perception and participation in cultural activities by the general population.

In my excitement to talk about the findings, I didn’t really take the time to examine the “shift” element that is intended to make this data so valuable. While preparing to do a presentation on the current findings, it occurred to me to take a look at the past finding as a point of comparison so I downloaded the 2014 data.

Even in a superficial scan of the 2014 materials, this next graph jumped out at me.

The legibility is a little tough at full size so I cropped it down to the top 10 responses about barriers to participation. The blue bar is the 2011 responses and the mauve is the 2014 responses.  A mauve only bar indicates they only started asking the question in 2014.

Now look at a representative sample of the top responses for the 2017 survey. One caveat – as best I can tell, the 2011 and 2014 didn’t break out these results by discipline as they did in 2017. Nor did they break it out by barriers for attendees and barriers for non-attendees. That may skew the results in some manner.

In the 2017 responses, regardless of discipline, among those that participate. The number one barrier was “inconvenience.” For the majority, number two and three were “didn’t think of it” and “rather spend time in other ways,” respectively

Among those that didn’t participate, every number one barrier, again regardless of discipline, was “Its not for someone like me.” For the majority, number two and three were “inconvenient” and “didn’t think of it.”

For nearly every discipline, with both participants and non-participants, “It’s Value Is Not Worth the Cost” is number five. (Except for zoo participants where it is fourth and dance participants where it is sixth.)

This significant change in placement really left me wondering what happened in the last three years.

Is cost no longer as big as factor? Does separating out the responses by discipline and participation level provide a truer picture of what presents a barrier to people? Did the researchers ask the questions in a different way that lead to different responses?

This last issue might have been an influence. In 2011 and 2014 they asked if the economy had impacted respondents’ cultural participation and how that manifested. These questions, which seem to have been absent from the 2017 survey, may have primed people to think about costs and their ability to pay.

There was also a question on 2011 and 2014 asking how cultural organizations could make it easier to participate. Lower cost of admission was number one. This question also doesn’t seem to have been included in 2017.

The lack of questions in 2017 suggesting economic factors were a problem and part of a solution may have diminished frequency with which people agreed or strongly agreed that cost was a factor as a barrier. From the information I have been able to find about how each survey was created and conducted, I can’t say if any of these things could have been an influence.

Cost isn’t the only category that make a significant shift. Look at where “I’d rather spend my leisure time in other ways” falls. In 2017 it is usually third or fourth but it was ninth in 2014. I can’t think anything so compelling that has emerged in the last 3 years that has caused people to shift it up in their priorities.

I would like to think that we can attribute these differences to the fact that the researchers are getting a lot better about the way they ask these questions and parse the data.

There Isn’t A Template For That

I was really grateful for Aaron Overton’s very first post on ArtsHacker last week.  Aaron is a programmer with a lot of experience in website development for performing arts organizations. (Disclosure: He did some work on the ticketing integration for my day job website.)

In his ArtsHacker post, he talks about how much work goes into making it easy to keep an arts organization website updated and looking good. I had a conversation about that very subject the day before his post appeared. Had I know his piece was coming out, I would have delayed my meeting a day and used the post to bolster my argument.

Because performing arts organizations have an ever changing cycle of events, it can take a lot of work to keep your website current, attractive and put the most relevant information in front of site visitors’ eyes.   Publishing platforms like WordPress make creation and maintenance of websites much easier than it was even 5 years ago, but there is still A LOT of coding that has to occur to make the process of adding and removing content quick, painless and in many cases, automatic.

The back end of my day job’s website has a nice set of orderly field that I can plug event information and images in to and everything appears in its proper place on the website.  About a year ago, I noticed a less than ideal placement of some information and asked my web guy if he could fix it. I was sitting next to him when he made the fix and even though it was easy to accomplish, I got enough of a look under the hood to realize how much work went into making things so simple.

At the time I even remarked that all those ads for build your own website in minutes services like Wix and Squarespace probably made people underestimate how much work went into making websites work well.  Certainly, those sites provide a great service to people and businesses to help them get up and going. But there may come a time in your personal/professional/organizational development where they won’t be enough.

And I made a similar comment in the meeting I had last week.

If you take a look at the first example in Aaron’s post, he mentions desired features that are likely common to many performing arts organizations:

…display headshots of the cast for an event. The set of headshots might have color-tinted photos with the actor’s name displayed on the bottom and some sort of rollover effect that slides in from the bottom when the user hovers or taps.

The client needs to have a pool of actors and be able to build “teams” that can be attached to events. The headshot photos may have many purposes, so they won’t necessarily have a uniform size or aspect ratio.

But to make that happen, he had to consider the following factors:

  • Provide a way for a site manager to create team member profiles with a large headshot photo.
  • Provide a team builder to group team members into ordered lists and note their roles on that team.
  • Create a way to easily place that team on a page for display, along with a few options to allow for different usages.
  • Crop the provided headshots to the right size and aspect ratio.
  • Style the output to account for converting the photos to tinted grayscale.
  • Accommodate different screen sizes and devices so that the final output looks good whether on a desktop or a mobile device.

These are only some of the tasks. During development, many other tasks have revealed themselves as necessary, most of which may have little to do with the final display seen by the site visitor but are necessary to making sure the feature not only works, but is efficient and doesn’t slow down the user experience.

The purpose of Aaron’s post isn’t to tell people to be prepared to pay a lot for a good website. He provides a number of tips about how to approach the design process and conversations you should have with your programmer early on so that you don’t end up paying too much.

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