How to Use Ersatz Knowledge For YOUR Benefit, Not Theirs

This week's post offers some follow-up thoughts on an article from two weeks ago about ersatz knowledge. Today, I want to explore how we consumers can use it for our benefit.

Recall that when we talk about ersatz knowledge, we're talking about information that appears to be useful, but in reality is used to achieve ends contrary to the consumer's best interest. For example, after a consumer has painstakingly learned all about cigars, a genre of wine, or tennis racquets, the process of acquiring this knowledge produces a weird sort of loyalty in the consumer.

It's not really loyalty though. What it is is a desire to make this ersatz information worthwhile--to use it, to put it to work. And this becomes a ready-made justification for spending more money on that product: by going up-market, buying more expensive versions of the product, buying future versions of the product, buying various accessories for that product, and so on. Psychologists would call this justification of effort. After you put so much effort into learning about cigars, there's gotta be a payoff in there somewhere, right?

Thus we can see how ersatz knowledge can be used to extract a sort of long term buy-in from the consumer, causing us to spend more. Usually much more.

Some readers might misinterpret what I'm saying so far: "Wait, are you saying we shouldn't try to become more informed consumers? That we shouldn't learn anything about the products we're buying?" Holy cow, no. That's not what I'm saying at all. In fact, saying so would be in total contravention to everything I've ever written here at CK.

What I am saying is there is sometimes a game being played around you, a game that takes advantage of your laudable desire to learn. Therefore, I want you to be able to meta-interpret the information around you, to distinguish between ersatz and actual information, and to use this information to level the playing field. And to help you do this, I want to offer a few insights and clues to help you use ersatz information for your benefit, not theirs.

1) Use all product information to find price inefficiencies and opportunities. I'll share two examples here, one with wine and one with coffee. Typically, the domain of wine is fertile soil for the worst kind of ersatz information, but here's one major exception: wines from Chile, Argentina and New Zealand typically offer the same quality at a far better value than much higher-priced wines from France and California. Knowing this helps you save money. Another example: a commenter in my prior post talked about using knowledge about coffee to find better value in what he buys. In both of these cases you use their knowledge to save your money. Many domains are loaded down with ersatz information, but if you use that information with an eye to discovering value, you can actually save money while increasing the quality of what you buy.

2) Be wary--incredibly wary--if you repeatedly learn information about the same genre of products. The classic example here is Apple products. How often have you heard someone go on and on about some feature or app on their iPhone, but when the next version comes out, this same person goes on and on again about the next new features and apps on that phone too? In other words, if you're learning a body of knowledge over and over again about different versions of the same product, you're being played, badly.

3) Watch out when the people "informing" you are also selling to you. In such cases there's a gigantic likelihood that the vast majority of the information is ersatz, and that information is skillfully structured to get you to pay more... and rationalize it to yourself. One solution here is to balance all vendor-based information with external and independent sources (Consumer Reports, for example) to verify and sanity-check any information you've been given.

4) Recognize instances where you ego blinds you. If you can step back and observe your ego throwing up contra-evidence and contra-examples to defend all the knowledge you've painstakingly acquired (Ultra high-end beer really is worth it! Let me hold forth intelligently on all the reasons why! And none of this is ersatz expertise! Really!), you're more likely to avoid getting sucked in to a deep and inescapable buy-in process. Nobody likes to think they've been tricked by the very knowledge they thought important to learn. And certainly no one wants to learn that the expertise they painstakingly acquired is just an elaborate buy-in device to get them to spend more. Your ego will want to protect you from this embarrassing truth by rationalizing and justifying. Look out for it.

On a related note: one of the reasons I selected cigars to illustrate the concept of ersatz knowledge was because nobody reading a healthy food and frugality blog is going to be "into" cigars, and thus no reader is likely to personalize the product category and ego-defend against criticisms of their knowledge of it. This (I hope) allowed me to better illustrate the concept. More on this at the end of the post.

5) Do you spend more now on this product compared to before? Once you learn all their terminology, once you're in their club with your knowledge, isn't it funny how you always seem to be spending a crapload more? This is the easiest-to-see clue that we've been taken in by ersatz information. With all this amazing information you now have, why do you seem to be carrying water for them, giving them so much more of your hard-earned money?

6) Watch out for status-signalling and virtue-signalling. Once again, let's consider the always-instructive domain of wine: the ersatz knowledge in this domain really seems like real knowledge, largely because consumers can signal sophistication and intelligence by regurgitating it. Do you enjoy signalling your knowledge by holding forth about a product or service that's been sold to you? When your knowledge of a product starts to become a part of your self-image, you're no longer a consumer with agency. You've been played.

A final thought: To paraphrase Daniel Kahneman in his brilliant book Thinking, Fast and Slow, it's always easier to see cognitive errors anywhere but in ourselves. Think once again about cigars: to the average reader here, it probably seems vaguely funny--if not pathetic--to spend, say, fifty dollars on something only to set it on fire. It seems even worse to light that fifty dollars on fire with a fifty dollar double torch lighter... while holding forth on how to retrohale. "Sheesh. That guy has no idea that he's regurgitating ersatz information. He's getting rudely separated from his money!"

See how much more easily we can see these mechanisms at work in domains we don't personally care about? Cigar smoking is a useful domain to explain ersatz knowledge because it's unlikely to trigger ego defense in any readers here.

Which takes us to the central insight: there are consumer product domains that we do care about, lots of them, where we are rudely separated from our money by these very same ersatz knowledge mechanisms. We just need to look a little more carefully through our egos to see it.

Read Next: Epistemic Humility

And: Nine Terrible Ways to Make Choices (That You Probably Didn’t Know You Were Using)

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