By W A Wijewardena –
Aseni, the wiz kid in economics, has been overexcited by the continued popularity of the video released by the young singer, Yohani de Silva. Within a matter of a month, it hit more than 100 million clicks for the main video and another 50 million in other sites that imitated it. It has been loved by music fans throughout the globe, a rarity for a singer from Sri Lanka. This had prompted the Marketing Guru of marketing in Sinhalese fame, Nalin Abeysekera, to brand it as an instance of taking Sri Lanka’s music industry to the global arena. She could not wait until she got the views of her economics mentor, Grandfather Sarath Mahatthaya, an ex-officer of the Finance Ministry.
The following is the dialogue between the two of them.
Aseni: Grandpa, the Sri Lankan young vocalist Yohani has released a music video which has gone viral throughout the globe. This is the first time it has happened. Have you watched it? What is your opinion on this?
Sarath: Indeed, I did. I enjoyed it immensely. It had been produced beautifully capturing Yohani’s face on camera at close range. Her eyes and voice have been the main attraction. She has in fact been able to penetrate the impossible glass barrier that effectively blocks a singer from this part of the world from entering the global market. I have observed that her fans have been from all over the world. Some of them had not even heard of the country called Sri Lanka. Now they have been inquisitive about that country and the strange language in which she had sung her song. She has shown us the path to the global market. But that direction per se is not sufficient. Sri Lanka must do a lot more to break the glass barrier for others.
Aseni: What are those additional things that we should do, Grandpa?
Sarath: The global music market is a complex one. We have two problems to tackle. One is the competition coming from other artists from this region as well as from the West. The other is the normal human behaviour. I will talk about it later.
Aseni: What is this competition which we have to tackle?
Sarath: The size of the global music market is about US$ 23 billion per annum. Of that, the streaming market in which Yohani is operating is about $ 12 billion or slightly higher than Sri Lanka’s annual exports. If we can tap at least 5% of the streaming market, it is about $ 600 million, more than our export of coconuts, rubber, and seafoods combined. The important factor is that its value addition is close to 100%.
There are other singers like Yohani who have captured this market. You may be aware that the Korean singer Psy who sang in Gangnam Style has about 700 billion hits for his original video and other ones produced by latecomers using it. From our part of the world, from India, actor cum vocalist Danush of Why this Kolavari Di fame has got about 700 million hits. His later song, Rowdy Boy, has exceeded even 1 billion hits. Singer Shakira who sang the theme song Waka Waka for the 2010 FIFA World Cub has 3 billion clicks. Britney Spears who sang her maiden Baby One More Time has got a total of 800 million clicks. Among these giants, we are a podian. Competing them out is not an easy task.
Aseni: What is this normal human behaviour that would go against us?
Sarath: These artistes will not remain forever at the top. If it happens it becomes explosive. But their popularity starts waning after some time mainly due to a special feature of human behaviour. That feature has been identified in a branch in economics now called behavioural economics. In terms of the principles of this branch of economics, changing human behaviour will pull these popular artistes down from the pedestals on which they are sitting. Hence, what is gained by any artiste or politician, or writer is not a permanent one. This is specifically true for politicians. They are up in the sky today. But tomorrow they will be forced to make a hard landing onto the ground.
Aseni: Wow, I am hearing about behavioural economics for the first time. How did this branch in economics come into being?
Sarath: Of course, the whole subject of economics is based on human behaviour. Therefore, there is nothing new about this subject. But it was forcefully presented by some economists toward the middle of the 20th century. Some of them even got the Nobel Prize in economics for their contribution to expand the frontiers of the subject.
In a nutshell, behavioural economics is the incorporation of psychological, cognitive, cultural, social, and emotional factors into the analytical foundation in economics. When you incorporate them into economic analysis, you must change the reasoning and logic behind each economic theory. Take for example the ordinary demand theory. We are told that the utility maximizing consumer will buy more when the price is low and less when the price is high. That is how we get the downward sloping demand curve. But when you add cultural or emotional factors to it, your demand curve even becomes upward sloping meaning that consumers buy more when the price is high and less when it is low.
There are many who have contributed to the subject matter in behavioural economics. In 1957, Herbert Simon came up with a modification to the idea of rationality that we use in economics. Rationality means that people will take into consideration all minuses and pluses of a decision they must make and decide in favour of it if and only if pluses are at least equal to minuses. This presumes that people have all the necessary information, time and resources to assess the pluses and minuses. However, Simon said that the rationality is a ‘bounded rationality’ due to lack of information, time, and brainpower. Hence, the choices are not optimal. Then, two psychologists, Daniel Kahneman and Amos Tversky introduced psychology to economics. Another economist, Richard Thaler, presented the importance of nudging in decision making. All these, except Tversky who had pre-deceased when Kahneman got it, have got the Nobel Prize in economics for their contribution. It itself shows the importance of behavioural economics.
Aseni: How does this behaviour of people affect young artistes like Yohani?
Sarath: A modern marketing Guru, Jonah Berger of the Warton School of Business of the University of Pennsylvania, has published a fine book in 2016 titled ‘Invisible Influence: The Hidden Forces that Shape Behavior’ explaining to laymen these high theories in simple language.
One of the influencing factors for people to like what others do is the herd behaviour. If you are in a herd and if others in the herd like something, you are also likely to like it. The economists call this ‘bandwagon’ effect, the desire to be included in a group. Hence, you jump on to the bandwagon and ride it to show that you are also a member of the larger group. A good example is the preference for brands. If other members of the group like iPhones, it is more likely that you also like them. By expressing your preference for iPhones, you also demonstrate your belongingness to the group. This can be further identified when one looks at the preference for particular models of iPhone like 9, 10, 11, or 12. When iPhone 13 hits the market, if others in the herd have gone for it, you too will invariably go for it. The sudden jump in the preference for Yohani is also guided by this principle.
Aseni: Grandpa, why should people jump on to Yohani’s bandwagon?
Sarath: Berger has provided a fine account of how singer Britney Spears became so popular within such a short period of time. She had sold over 100 million albums worldwide. Of them, 37 million have been digital albums, the type of music business which Yohani could engage herself. Berger says Britney became a success because through the marketing done by her own fans. When one likes her for whatever the reason, he tells his mates, those mates their other mates and so on. Finally, everyone in the business wants to jump her bandwagon and become included in the club of fans. This happens so quickly that it spreads like a wildfire and not a single or a group of dissidents can stop it.
Berger also narrates the success story of J K Rowling and her Harry Potter series. Her first Harry Potter had been rejected by 12 publishers on the ground that it was too long, and children’s books were not money makers. Finally, one of the publishers, approached by Rowling, had given it to his daughter who had immediately got enamored by it. She had started nagging him for months until he could not resist her demand anymore. The book was published and people of all walks of life wanted to jump to her bandwagon and be included.
Aseni: That is great. It means this bandwagon theory can uplift any artiste to the greatest heights of his profession and leave him there?
Sarath: Not exactly. That is because there is another effect called snob effect that comes into being. That effect will push the person down from the high pedestal to which he has been raised.
Aseni: Snob effect? I have not heard of it. What is it?
Sarath: That is the opposite force of the bandwagon effect. Bandwagoners want to be included. As a result, I like something because you like it. But the snob effect says that I do not like it because you like it, or I like it because you do not like it. Here the objective is to be excluded. In other words, people want to project themselves as different from others. That can be done not by joining the club but by moving out of the club. Therefore, snobbers are outsiders.
Aseni: Are the snobbers same people as bandwagoners?
Sarath: Yes and no. Yes, because when people are saturated in one thing, they get lower and lower satisfaction from an additional unit of same thing. This is what you have learned as diminishing marginal utility in school. But the analysis has now moved farther than that. After some time, people start feeling there is no more kick by being in the club. They meet the same people, talk to the same people, converse on the same topic again and again. At that time, psychologically, they want to be different. When that motive strikes them, they want to leave the bandwagon and develop themselves as distinctly different people. At that stage they start loving being different. Hence, the very same people who had earlier liked someone because others also liked him begin to dislike him and be different. At that stage, the snob effect takes over. In addition to that there are snobbers right-away. They are a minority, but it is those who have earlier been bandwagoners are the people who rock the apple cart. Therefore, being hit by snobbers later is the common risk faced by artistes, writers, and also politicians.
Aseni: This reminds me of the popular song sung by Nanda Malini on lyrics written by Sunil Ariyaratne. It says that it is those who have lifted you to the pedestal are the ones who will stone you later. But how does this apply to politicians?
Sarath: Your comparison of the situation with that song is perfectly correct. As for politicians, you know very well that every politician rides to power through a massive bandwagon exercise. The voters are emotionally touched by them to jump on to the bandwagon they have created for the gullible voters. But the voters who have voted him to power because others also have decided to vote for him will soon get frustrated and want to be different. Then, they leave the bandwagon and want to be different. You can judge it for yourself by examining the election results of every election and reading through the public opinion after one year or so. Hence, if a politician thinks that his power base is permanent and strong, he is very badly misguided.
Aseni: Thanks Grandpa, for the illustration. I now know that Yohani could avoid being hit by snob effect by recognizing that her current popularity is to wane quickly. So, she should come up with a new video as J K Rowling had done by releasing a series of Harry Potter novels.
*The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at email@example.com