How businesses can cash in on consumption trends

Traditional economics stand on the pedestal of esoteric equations and graphs. [iStockphoto]

Jotham Ndung'u wrote back on our article last week reminding us of something else we had forgotten about human behaviour - paying to use "empty spaces" for weddings, parties and picnics.

Yet when growing up in the countryside, we took such spaces for granted.

It was there! Growing up next to a national park, I wondered why someone would pay to see animals in a park.

But today, I have no qualms about paying for a game drive. It was hard to pay for a cup of tea Sh500 in a five-star when a litre of milk goes for Sh40. Today we do that and boast about it.

Who thought one can pay for business or first class in a plane despite the key objective being moving from point A to B? And passengers in both first and economy arrive at the same time?

I am told that does not apply to Dundori where passengers fight to sit with the driver to arrive earlier! Any reader from there?

We pay more for matatu "shuttles" which may not be faster than ordinary matatus. You pay for a hotel room for Sh30,000 while someone else pays Sh2,000 and sleeps even better.

Traffic jam

A big car, say, with a 3000cc engine capacity and a small one with 1000cc are both caught in the traffic jam till we got the expressway.

We can go on with the list. As hustlers, such high prices are seen as exploitative. But it's voluntary. Economists quickly call it price discrimination.

Thorsten Veblen called it conspicuous consumption. You want to be recognised by an invisible audience. We love showing off - it's innately human.

Add our desire to be identified with successful people, who consume certain products and services, we are willing to pay a premium.

Traditional economics stood on the pedestal of esoteric equations and graphs.

But modern economics stands on our behaviour which is soft and easily influenced.

With social media, it's even easier to influence our behaviour. The success of the modern economist hinges on borrowing from psychiatrists, sociologists, psychologists and possibly from witches or witch doctors.

Infusion of behavioural sciences into economics makes the subject more complicated, but more human without the certainty of algorithms.

It has made the customer more vulnerable but made it easier for entrepreneurs to make money. The herd mentality is now real.

Should we weep or celebrate that? What do you think?