UC Irvine professor Richard McKenzie has been getting quite a bit of press for his latest book, Why Popcorn Costs So Much at the Movies, And Other Pricing Puzzles.
McKenzie did a fair amount of real-world research on the popcorn front, and his most important finding (as far as I’m concerned) is that if you’re in a cinema which gives you a choice between buying a medium bag of popcorn and a large tub of popcorn, there’s a greater-than-50% chance that the medium bag will actually contain more popcorn than the large tub.
McKenzie is quick to say that this doesn’t mean the theaters are ripping us off: he claims that the tub can still be a better deal if you take advantage of the fact that it comes with free refills. But even he admits that at least half the people buying the tub have no idea that it comes with free refills.
McKezie’s been thinking about popcorn a lot. Here’s a snippet of a much longer email he sent me:
Oh, one last point of little consequence: The prospects of getting more
popcorn in the medium than the large is higher here, since the medium is
a bag with flexible sides and the tub has rigged sides. Both mediums
and large sizes in Winston-Salem are bags with flexible sizes. There I always got
more in the large (not much more!). Here, a little more than half the
time I got more in the medium. It all depends on the clerks, and how
she/he holds the bags and then chooses to literally stuff the bags by
pressing the popcorn down. But then the ounce measures are not a firm
indicator of value, since a higher weight can mean more bottom of the
popping cabinet crumbs and un-popped kernels.
I love this stuff, and actually I wish there were more along such lines in the book. Instead, a lot of the rest of the book (and, indeed much of the popcorn chapter too) is relatively dry stuff about price theory, with very little in the way of real-world examples or evidence.
At one point, McKenzie says that the opinion that "houses with views sell quicker than
houses without views" is "patently misguided", despite the fact that he doesn’t bother to check whether it’s true or not. To be sure, if it’s not true, then it’s not hard to come up with a price-theoretical reason for that. (Although the explanation doesn’t cover why so many people believe it to be true, including a large number of real-estate professionals.) But on the other hand, if the opinion is true, it’s also not hard to come up with a reason: perhaps people are more likely to fall in love with
a house with views, and it’s easier to sell a house to someone once
they’ve fallen in love with it.
So I told McKenzie I would have preferred more empiricism in his book, and asked how many of his theories were falsifiable, since what empirical data he does use seems to have very little effect on his conclusions. He replied:
I totally disagree with the with the widely held proposition that the only meaningful arguments are those that are falsifiable in terms that would be construed as "science"…
I really see the popcorn weight differential by size as an interesting observation, but the better, more accurate observation is that the weights are highly variable across theaters and concession clerks; consumers of the tub can count on getting more popcorn if they intend to go back for free refills. Again, I don’t see a need to evaluate this issue with scientific rigor. I find more interesting the issue of the pricing strategy, which has gotten even more interesting since I submitted the final draft for printing.
Other than that, I am inclined to believe that there are some arguments that can be mustered to unsettle conventional wisdom that are simply not worth the expense and time that would be required to mount the type of falsification effort I gather you have in mind. And I don’t hold up bad efforts at falsification as a model for advancing discussion.
I would never say that the only meaningful arguments are those which are falsifiable. I love arguments which work on an a priori level, like Kinsley’s Proof That Social Security Privatization Won’t Work. And while there’s nothing in McKenzie’s book quite as elegant as that, there’s lots of interesting and somewhat counterintuitive thinking about pricing puzzles. I just wish that he got out a bit more, is all.