The Short-Sighted Cellphone Buyer

This essay marks the beginning of a series regarding an idea of shortsightedness in how we perceive economic and social issues, and how that shortsightedness results in a negative net impact on society, whether it be through action or simply incorrect opinions and mindsets. This first piece relates to a belief set that has become more and more prevalent in recent times: that corporations are greedy and not to be trusted. The problem with such a mindset, as I will explain, is the failure to consider all aspects of a situation, or all potential causes of a particular outcome. When we take the time to consider less obvious factors, things start to make sense in a way we previously could not have imagined. Without further ado, the story of the short-sighted cellphone buyer:

Working in cell phone retail, a main sales focus is protective accessories, such as cases and screen protectors. Many modern phones have large, expensive, somewhat fragile glass screens, and a tumble to the ground might result in a costly repair, so sales reps stress the importance of the investment in quality protective accessories.

One day, a customer made the offhand comment, “I don’t see why they don’t just put screen protectors on in the factory. It’s just another way for them to squeeze another dollar out of you.” He went on to speculate that cell phone manufacturers could make the devices less fragile, but choose not to in order to rake in the profits from the sales of cases. His cynicism is indicative of the modern American paradigm of distrust toward business, and while his analysis may seem logical at first, it, like the paradigm it represents, is based on a sort of shortsightedness.

The customer’s argument is a flawed one. The most basic issue is that cell phone manufacturers generally do not also manufacture protective cases; cases and other accessories are usually produced by third-party companies, so cell phone makers stand to gain very little by intentionally making their devices fragile. However, there is a much more interesting point to consider, one which hinges on basic economic principles: some people value keeping their device in good shape more than others.

Milton Friedman once explained this concept when challenged regarding Ford’s decision not to recall the Ford Pinto. The Pinto was discovered to have a defect that could cause fire as a result of a car accident. Ford decided initially not to recall the car, as the cost of recalling every Pinto would greatly outweigh the cost of settlements in the case of injury or death resulting from the defect. The audience member challenging Friedman villainized Ford for their seemingly callous cost-benefit analysis. How could they reduce the choice of whether or not to save lives to a mere numbers game? But, as Friedman explained, he was missing the point: Ford’s responsibility is to inform the consumer of the danger; after that, whether or not to buy the Pinto depends on how much the consumer values safety. Some people, such as parents of young children, might value safety greatly, while others, such as young bachelors, might value other things, like style, or performance. People who bought the Pinto even after the defect was known apparently valued low cost over safety, and that choice was theirs to make.

So how does this relate to my customer’s cell phone protection woes? The customer simply failed to understand that some people do not value protection as much as he does. If a cell phone maker were to make their phones rugged, that would increase the cost of production, and that increase in cost would be passed on to the consumer. For a customer who values protection, this is fine. He was willing to pay for the protection anyway, and if it’s built-in, it doesn’t seem like an “extra.” But for the customer who values low cost over safety, the choice between low cost and safety is lost. The manufacturer would be making that choice for consumers, rather than letting consumers make it themselves.

The cell phone makers, like Ford, aren’t acting out of greed, or ill-intent, they are simply leaving the option of durability (or in Ford’s case, safety) as just that, an option. People have different preferences and values. It is easy to see our own preferences, but when we fail to understand other perspectives, we end up like the cell phone buyer: upset and distrustful, for no other reason than a lack of understanding.