Does more information for consumers lead to better choices?
Today’s post is contributed by Ewelina MAREK from the OECD Directorate for Science, Technology and Industry.
I was recently thinking of changing my mobile phone plan as my current contract was almost up. I started searching on the Internet and was amazed how many web sites there are to compare offers! Many offers looked much better than what I had been getting from my current provider. But by the time I was looking at a fifth website, I was getting a headache. Some contracts were for only one year and some lasted longer. Others offered more minutes or free Internet or for just a little more per month, I could even get a new phone with Wi-Fi and 60 TV channels. As I was getting lost looking at all these offers and conditions, I decided to pick the first offer on the web site I was looking at right then. Within just a few clicks I was locked into a two-year contract with a provider that ultimately may not have been the best option for me.
Have you ever asked yourself when buying something if you were making the right choice or getting the best offer? The OECD’s Consumer Policy Toolkit can help answer this question. The OECD not only looks at global trends from a macroeconomic perspective, but also follows developments in our everyday consumer choices. In that regard, the OECD Committee on Consumer Policy has been addressing a number of emerging issues for the past few decades. It also highlights the public debate on how consumers make decisions and how insights from behavioural economics could improve the way they do so.
One rule of thumb in behavioural economics is that consumers do not always make rational decisions, particularly when they are confronted with complex markets or products where it is difficult to make comparisons. And when I think about how I chose my mobile phone plan, I must say I could have done better. But I was too overwhelmed and impatient to deal with all the information I was seeing. According to the Consumer Policy Toolkit, the way I made my decision was no exception as that is how consumers often make their decisions (which they often regret) when faced with too many offers and too much information.
What does the Toolkit shows us? Among other things, that we often have difficulty evaluating very sophisticated products and services. And that we should take the time to filter information rather than hurry. Bet that doesn’t surprise many of us. Yet the world we live in is saturated with tons of information and rarely “enough” time to analyse it to anyone’s satisfaction. So how can consumers get a better deal? What policy instruments have been useful in helping consumers make good decisions? Check out the Consumer Policy Toolkit and let us know what you think!
OECD work on other consumer policy issues available at: