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Gabe Zichermann

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Occupy Wall Street and the Crisis of Choice

Posted: 11/22/11 02:30 PM ET

It's been a wild week for the Occupy Wall Street movement. While there have been literally hundreds of insightful analyses of the protests and their reasons, one area that deserves a deeper dive is how we can use behavioral economics and motivational design to better understand the movement and ultimately create a better, more vibrant democracy.

Many people see Occupy Wall Street as being about economics, per se. That some in the country have profited from global economic crises while others have fallen far behind is an obvious complaint. The mantra of "Privatize Gains and Socialize Losses" has taken on particular currency -- becoming a rational shorthand for the central complaint.

However imbalanced the economic system of the United States or the excesses of the global financial industry, I believe that the lack of meaningful consumer choices is the driving force behind this movement. Once we see the fundamental market problem as political-systemic, rather than financial, the movement -- and its adherents, oddities and ennui -- start to make a lot more sense.

This dynamic is well understood by any six year old child -- when you're given an apocryphal choice, you may make it but you probably won't be happy. For more insight about choice economics and satisfaction, it's worth reading 2004's seminal research "The Tyranny of Choice." To summarize the relevant parts of this research, most consumers are unhappy when there are no choices (e.g. there is only one official government TV station). Everyone is happy when this choice goes from one to two ("Yay, now we have two stations"), and most systems seem to favor 3 choices by default. Any more than 2-3 options, and some consumers become markedly less happy due to choice confusion and inertia.

When we start to think of politics as a market-driven activity, and political parties as products we choose to "buy" with our votes, the U.S. system starts to show some basic econometric flaws. While there are nominally two choices (Republican vs Democrat) their literal actions (the brand's realistic value) are not that different. Though they may argue about health care policy or gay marriage, they both vote for war, they both field millionaire candidates and both accept vast donations to "buy" their votes in Congress. Obviously, a third viable party -- and more clear differentiation from Republicans and Democrats -- would go a long way toward improving overall "customer" satisfaction and reducing diffused voter frustration.

Barriers to entry are high, and the regulatory framework is cumbersome. A third vibrant party would likely raise overall voter participation, fundraising and democratic involvement -- not to mention national unity and cohesion. Free market supporters across the political spectrum should follow this philosophical trail and make it possible for alternate parties to become viable in the U.S. marketplace.

But the behavioral economic complaint of Occupy Wall Street is not about the dual party system in the United States (though reform might go some way toward alleviating their concerns). It's about the lack of choice in our overall economic system itself. That is to say, U.S.-style capitalism has no competition in the marketplace.

The dialogue in the U.S. posits that our basic economic principles are sacrosanct and highly optimized. Every president since Reagan has -- with some finesse -- advanced core ideas of this model, such as the need for smaller, more efficient government, less regulation, more free trade, etc. Even ostensibly governmentalist policies like the Obama administration's national health care initiative still focused on private insurance as the main driver of care expansion.

In short, anything that isn't a free market solution in the United States is tainted with the epithet "socialism," all alternate economic models appear to have been discredited in our popular discourse, and we conflate economic models (free movement of capital) with human rights (freedom of expression). Against this backdrop, a population that doesn't want to "buy" the current economic system has no viable alternative option in the marketplace.

At the same time, the lack of competitive ideas is making U.S.-style capitalism lazy. We hold on to our beliefs even when the evidence shows that other economic approaches (see China, Canada, Singapore) can yield extraordinary results. We dismiss these alternates out of hand because they don't fit our "religious" view of economics, and therefore we get our lunch eaten both in the marketplace of ideas and the global economy. Because there is no seeming alternative, our leaders and key investor class continue to move with inertia instead of innovation.

U.S. style capitalism, in other words, is becoming obsolete. But like most organizations, we are failing to see this market shift.

So it's no wonder then, that the youngest generation are canaries in the coal mine. After all, today's American youth are extraordinary consumers. They have been raised in an environment that favors exceptional innovation, that treats entrepreneurs as rock stars, and lavishes praise and power on a connected population through social media. When they don't like something, they tweet and retweet it until millions of people are aware of their views, and they've been taught to vote with their wallet if products, services or brands fail to deliver. This is part of the reason that motivationally-driven systems like Gamification have gained such traction: today's consumer demands choice, self-direction and social transparency.

They approach everything in life with a consumerist worldview. Why wouldn't they look at the current economic context of the United States much the same way? After all, we taught them to make their voices heard and use economic/consumer leverage to change outcomes. But the market isn't offering a product they want to buy. The U.S. economic system is becoming less appealing (it's brand has become inauthentic), we don't allow other ideas (products) into the marketplace, and voting with their wallet (leaving the U.S.) is economically infeasible for most.

So what do you expect consumers to do? Begrudgingly buy into the product, and constantly voice their frustration until something better comes along. If it doesn't however, it should come as no surprise that rising frustration begins to breed a user revolt.

The fundamental prescription is clear: we must take our consumerist world view to heart and apply it to our political system. Let's increase the number of choices by liberalizing political startups. Let's make it easier for consumers to make informed decisions and use technology to get them closer to the decision making process. Let's give people real options and allow them to shape the discussion openly and honestly.

Given our long history of consumer innovation, you'd think this would be easy.

 

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