Economists tell us that people are inherently rational when it comes to choices involving costs. They will make financial decisions that are in line with their personal interests, or at least what they think is best for them. Although there are many great entrepreneurs doing good things for society, there are many other entrepreneurs looking for opportunities to deceive and manipulate those who can be easily exploited.
The pressure and struggle to survive in an extremely competitive atmosphere, the ambition and desire for dominance, a “keeping up with the Joneses” mentality, technological progress or simply the pervasiveness of hedonistic values all contribute to this modern-day phenomenon dubbed “phishing.”
Phishing encourages some business people, driven by greed and self-aggrandizing impulses, to deviate from conducting honest business transactions and instead create alluring opportunities with the intent of taking others for a ride — a very bumpy road. At the heart of this phenomenon is the question of whether what people buy is always good for them, and really fulfills their desires or real needs. The best answer to this question is no. Rationality and common sense are often overridden by diversionary forces such as emotion, peer pressure, assimilation into a mob mentality, snobbish appeal and inner foolishness. Unfortunately, some people are often misinformed and easily manipulated by the phishers.
Notably, in unfettered free-enterprise economies, there are many greedy entrepreneurs who are tempted to take advantage of the most apparent weakness of people — an inability to resist temptation. Nowadays, some business firms craft sophisticated schemes to take advantage of consumers, like creating fear of the unknown, or launching products as solutions to problems that rarely exist, or do not exist at all. As an example, consider the proliferation of male sexual enhancement drugs. Most of these are best-sellers, even though sexual dysfunction is not all that daunting of a problem. Likewise, consider the proliferation of online companies selling goods and services that, contrary to their claims, seem to have no life-enhancing value, or financial firms seeking to entrap senior citizens and rip off their life savings using sophisticated schemes.
On the other hand, we consumers may be guilty of complacency by being the soft targets of this kind of chicanery. Millions of people, for instance, use harmful drugs despite the physical and mental hazards of doing so; or we consume processed meats, sugar and salt; or we smoke tobacco despite the warnings of health experts not to do so. To a lesser extent, consider the example of bottled water that has grown into a huge industry with $7.3 billion in annual sales, and this windfall continues to rise. I don’t know how we were persuaded to accept the idea that expensive water sold in a bottle is safer and better for us than the free tap water we drank for decades? With the exception of Flint, Michigan’s poor handling of its water crisis, there is no credible, conclusive evidence to support the claim that we need to keep spending money on bottled water. By the same token, purchasing a pair of shoes at Payless for a decent price is one thing, but frenzied shoppers camping out on the street in front of a soon-to-be-opened store to buy a pair of Nike shoes for $200 is quite another. The fact that some people are willing to spend that much money on a pair of shoes, while not meeting their basic needs, is mind-boggling. The best explanation is that the “keeping up with the Joneses” mentality often decides for them, and they become victims of their inner childish compulsions.
Keeping up with the Joneses often seduces us to go astray, and dictates some of our thoughts and beliefs, even though people are believed to be the best judges of what’s best for their own welfare. Under unregulated capitalism, profit-seeking entrepreneurs will automatically exploit the vulnerability of ill-informed compulsive buyers in the market and will sell almost anything to them. This means the phishing phenomenon will continue because unscrupulous entrepreneurs cannot ride on your back unless you bend over.
Reza Varjavand (Ph.D., University of Oklahoma) is associate professor of economics and finance at the Graham School of Management at Saint Xavier University in Chicago. His research interests include the economics of healthcare; the pedagogy of teaching; economic development, especially in developing countries; economic crises; and the economics of religious practices.
