Washington - So you're sitting on a plane, somewhere in the back. And you hate everything right now. The airline, for its stinginess. The flight attendant, for pouring you half a can of Coke, then taking the can back. But most of all, you hate your fellow passengers.
Then someone next to you swipes his credit card to buy an in-flight movie, which again reminds you of the insult, the nickel-and-diming, of air travel.
And yet. After analysing a confidential database of passenger and time-stamped purchase records, a Stanford professor discovered that if someone next to you buys something on the plane, you're 30 percent more likely to buy something yourself.
That's the power of what economists call “peer effects.”
In a working paper, Pedro Gardete looked at 65 525 transactions across 1 966 flights and more than 257 000 passengers. He organised the data into thousands of mini-experiments.
If someone beside you ordered a snack or a film, Gardete was able to see whether, later, you did, too. In this natural experiment, the person sitting directly in front of you was the control subject. Purchases were made on a touchscreen; that person wouldn't have been able to see anything.
Because he had reservation data, Gardete could exclude people flying together, and he controlled for other factors such as seat choice. This is purely the effect of a stranger's choice.
By adding up thousands of these little experiments, Gardete, an assistant professor of marketing at Stanford, came up with an estimate. On average, people bought stuff 15 to 16 percent of the time. But if you saw someone next to you order something, the chances of your buying something jumped by 30 percent.
“That magnitude I really didn't expect,” Gardete says. “It's crazy, crazy.”
Economists and social scientists have long wondered about the power of peer effects, but it's one of the trickiest research problems.
“Social effects in consumption are very hard to measure,” Gardete says. “Just think of a supermarket. The number of things happening in a supermarket are so huge that it's very hard to measure anything.”
The beauty of this paper is that it looks at social influences in a controlled situation. (What's more of a trap than an airplane seat?) These natural experiments are hard to come by.
So that sneezy guy who elbowed you off the armrest on your flight back from Thanksgiving? He just might have changed your day in ways you didn't realise. - The Washington Post