Realist, not conformist analysis of the latest financial, business and political news

Should Footballers Price Your Haircut?

On the gameshow “Who Wants to Be a Millionaire”, each contestant started the game with three lifelines – if they got in trouble and didn’t know the answer to a question, they could get help.

They could play a 50/50, which eliminated two wrong answers from the four possible answers.

They could Phone a Friend and speak with someone for 30 seconds whose knowledge may have exceeded their own in some regards.

Or they could Ask the Audience.

This last lifeline has always fascinated me – it represents a cornerstone of free market capitalism after all.

When you Ask the Audience, you are crowdsourcing wisdom – assuming that the majority of any large group of people will be so close to the truth (and so evenly too high and too low) that the outliers will be insignificant and the average a useful figure.

Most of the time, it works really well.

For example, if you looked in your mobile phone contacts right now, you might find about 150 individuals you know at least a little. If you texted them all right now, and asked them how much you should pay for a haircut tomorrow, I imagine you’d get some interesting replies.

If we removed the outliers (your best mate telling you he’ll do it for free, or one of your exes telling you to piss off) we might get 100 serious replies.

I suspect that regardless of your gender, we could chop off the highest ten guesses and the lowest ten and take a mean of the rest and we’d have a workable number.

Now imagine you decided to take that number under advisement and texted your question to a Premiership footballer who didn’t know you at all.

I suspect his answer might be a little………

And this is like how the free market outperforms central planners.

When you rely on lots and lots of people to discover a price for you, the answer is usually quite reliable, and can take into account lots of variables.

But when you ask someone with a highly skewed impression of what things cost (“How much is a pint of milk Minister?”) things tend to get a bit weird.

So next time you are informed that your local council just spanked a million quid of your council tax on two bollards and a speed bump, don’t be surprised they don’t know the price of things.

Because they failed to Ask The Audience.

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bloke in spain
bloke in spain
3 years ago

The logic of the post is, of course, impeccable. But there’s another aspect of quizzes it’s worth bearing in mind. Always be sure the question your supplying the answer to is actually the question being asked. Take your example. One might initially presume the question is “What is the correct price to pay for two bollards & a speed bump?” But a moment’s thought reveals your local council will be interested in claiming how much it spends on road safety, not how much it doesn’t spend. So exhausting its entire road safety budget on these three items is its best… Read more »

Tim Newman
Tim Newman
3 years ago

A pal of mine who used to work at Chelsea football club was approached by a very famous footballer who asked him to buy him a packet of cigarettes (a modern footballer can’t be seen buying them in person). He then handed my mate £50 and asked if that would be enough (this was about 8 years ago). He really had no clue.

3 years ago

It’s like my objection to the mantra “we must spend more on the NHS”. Why? We chould be aiming to spend *less* not more, by paying 2p for salicylic acid instead of £1, and spending £1 on a home support nurse instead of £10 on a hospital bed. Which then leaves more money to spend on magic scanning machines and complicated procedures.

3 years ago
Reply to  jgh

Ah, but it is “magic scanning machines” that are driving up the cost of health care! That is what American central planners think; the initial moves toward “affordability” had central planners focus blindly on the big-ticket items: magic scanning machines (leading some states to impose the absurd prior restraint of the “Certificate Of Need” on purchase of a CAT scanner) and, of course, management salaries. These pricing experts never “asked for a lifeline” from the audience either. Oppose them and you will lose the next election, on the grounds of “being against affordability” and “not being on the side of… Read more »

3 years ago

But the problem with the American system is that as long as you have the coverage it is in the interest of the hospital to order as many tests as they can get away with as they get paid more and get to utilise their fancy machine enough to justify the outlay

3 years ago
Reply to  BniC

This is a problem with any system in which the payer is not the one deciding what to buy. It is also a problem with medicine itself: A doc may order extra tests not to pad his bill but to eliminate possibilities and increase his confidence in his diagnosis from 95% to 99%. Makes him look better but the patient might not elect to spend his own money for it. The notion of “outcome-based coverage” is trendy here, under which hospitals would not be paid for each procedure or test but per patient, with incentives to deliver a “good” result.… Read more »

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