Sneaky Bastards

Yesterday I discovered one of the reasons I wouldn't make a good crook. I'm just not devious enough. Sure, I'm devious in the big things ;-) , but I've never even thought of being devious in the little things, which can add up.

Here's how I discovered this.

A few weeks ago, I read a post in Bruce Schneier's blog called "A Security Market for Lemons". It makes some great points about information security products. Specifically he discusses why bad products often outsell good products. The explanation of how this happens is very good, but the cause is what interested me. The cause being that the consumers of these products often do not have enough information about the type of product they are evaluating, what it does and what its value is. This is compounded by the consumer knowing even less about the specific vendor's implementation of the class of product. The one thing the customer does know is price. From there, its a simple equation... The buyer thinks, "All the products seem the same to me. I'll buy the cheapest".

Here in lies the problem. Few of us really internalize the concept of "you get what you pay for". Almost invariably, the cheapest to buy was the cheapest to design and cheapest to build. i.e. crap. Schneier goes on to paraphrase Nobel Prize winner George Akerlof, describing how the sales of the low price, low quality products cause the vendors with better products to lower prices in order to compete. These cuts lower the average price in the market which can cause a downward spiral, eventually shutting out the good vendors entirely. Akerlof's paper, "The Market for Lemons" makes this point much better than me using an example of used cars.

Back to what interested me. The cause of all this, buyers who are as well informed as the sellers is called Asymmetrical Information. When one party in a transaction has much more or less information, there is a great chance that one party will take advantage of the other. In the insurance industry, a consumer with grave illness can hide it until they are insured and then take the insurance company for a ride. This is why so many carriers exclude preexisting conditions. I remembered reading, in Freakonomics, that real estate agents, when selling their own homes, will leave the home on the market for longer and make more money than comparable homes they have sold for their clients. I realized that I buy things all the time without the benefit of enough information. I decided to read a bit more so I hunted down The Market for Lemons. Turns out its hard to find on the web in its entirety. I won't tell you where to look as I'd hate for the copyright police to take it down.

Now to my point... finally... In Akerlof's work, I came across this tidbit:

In India, for example, under the Export Quality Control and Inspection Act of 1963, "about 85 per cent of Indian exports are covered under one or the other type of quality control." Indian housewives must carefully glean the rice of the local bazaar to sort out stones of the same color and shape which have been intentionally added to the rice.

Get this!!! People would add rocks to rice, which is already the most produced and abundant food source on the planet, just to make a few more bucks!

I realize of course that the great supply of rice drives the price of rice down and thus one needs to sell a lot in order to make money, but that is just more sneaky that I've ever considered being.

I'll never get rich by being sneaky, I just can't compete.