How human brain judges popularity

Wall Street Journal today describes the work of Matthew Salganik and Duncan J. Watts (published in Social Psychology Quarterly in December 2008) on researching herd mentality with popularity rankings. 12,000 volunteers were given 48 random fairly obscure songs, and asked to rate them. To help things out, popularity rankings were provided. Except that a certain group saw the popularity ranking in exactly reverse order – least popular songs appearing on top. You’d think that good songs would still win based on their merit, right?

The prior No. 1 began making a comeback on the new top dog, but the former No. 47 maintained its comfortable lead on the old No. 2, buoyed by its apparent popularity. Overall, the study showed that popularity is both unstable and malleable.

Look for page 338 of that PDF document if you want to read the details of the experiment.

Another research Carl Bialik points to is Observational Learning: Evidence from a Randomized Natural Field Experiment by Hongbin Cai, Yuyu Chen, and Hanming Fang out of Duke that gave customers of Chinese restaurants a “most popular items” list when they were ordering off the menu:

We find that, depending on the specifications, the demand for the top 5 dishes is increased by an average of about 13 to 20 percent when the top 5 popularity rankings are revealed to the customers; in contrast, being merely mentioned as some sample dishes does not significantly boost their demand. Moreover, we find some modest evidence that the observational learning effect is stronger among infrequent customers, and that customers’ subjective dining experiences are improved when presented with the information about the top choices by other consumers, but not when presented with the names of some sample dishes.

Yes! 50 Scientifically Proven Ways to Be Persuasive

Noah Goldstein’s, Steve Martin’s (no, not that Steve Martin‘s) and Robert Cialdini’s Yes! 50 Scientifically Proven Ways to Be Persuasive is a pop psych book, where a bunch of research in psychology is distilled into one readable volume.

50 scientifically proven ways constitute 50 chapters of the book, longest of which take 7 pages. The authors take the position that persuasion is a science, not art, hence with the right approach anybody can become the master in the skill of persuasion. So, what are the 50 ways?

  1. Inconvenience the audience by creating an impression of product scarcity. It’s the famous change from “Call now, the operators are standing by” to “If the line is busy, call again”, that greatly improved the call volume by creating the impression that everybody else is trying to buy the same product.
  2. Introduce herd effect in highly personalized form. The hotel sign in the bathroom informed the guests that many prior guests chose to be environmentally friendly by recycling their towels. However, when the message mentioned that majority of the guests who stayed in this specific room chose to be more environmentally conscious and reused their towels, towel recycling jumped 33%, even though the message was largely the same.
  3. Ads quoting negative behavior en masse reinforces negative behavior. Petrified Forest National Park A/B tested two versions of a sign imploring people not to steal pieces of petrified forest from the park. One mentioned large amounts of petrified forest taken away on an annual basis, the other one simply asked the visitors not to remove petrified wood. The first one actually tripled the theft ratio as it showed stealing petrified wood as something commonplace. Same effect was observed after airing an ad that implored women to vote, but mentioned that 22 million single women did not vote last year. That kind of information actually portrays not voting as more socially acceptable.
  4. Avoiding magnetic middle. A California survey measured energy usage of a neighborhood on a week-by-week basis. When the average electricity consumption for the neighborhood was calculated, researchers sent thank-you cards to those using the energy conservatively, and a nice reminder to perhaps conserve to those who used electricity liberally. Net effect? While the liberals tried to cut down on unnecessary energy usage, the conservatives, finding out they’re way below average, suddenly became way more liberal with their energy usage, which actually increased the amount of energy used by the neighborhood. Proposed solution that worked? Sending a smiley face card to conservatives with a request to keep doing what they were doing, instead of pointing out they were at the right end of the bell curve.
  5. Too many options necessitate selection, and hence frustration, when brain decides it’s unnecessary work. The example here is given by a company that manages retirement funds for other companies, and hence has access to retirement information of 800,000 employees. When employees were offered a choice of 2 funds, roughly 75% signed up for a retirement program. When the number of funds was increased to 59%, even though qualitatively this was a better deal for employees, only 60% decided to sign up. When Head & Shoulders brand killed off 11 flavors of the shampoo, leaving only 15 on the market, the sales rose 10%.
  6. Giving away the product makes it less desirable. Researchers gave one group of people a picture of a pearl bracelet and asked to evaluate its desirability. Another group of people was given the same task, but prior to that was shown an ad, where the same bracelet was given away for free, if you bought a bottle of expensive liqueur. The second group considered the bracelet much less desirable, since mentally a lot of potential buyers (35% of them to be exact) shuffled the bracelet onto “trinkets they give away for free” shelf in their brain.
  7. A more expensive product makes the old version look like a value buy. An example here is a Williams-Sonoma bread maker. After an introduction of a newer, better, and pricier version, the sales of the old unit actually increased, as couples viewed the new item as “top of the line”, but old product was all of a sudden reasonably-priced, even though a bunch of features were missing.
  8. If a call to action is motivated by fear, people will block it, unless call to action has specific steps. A group of people received a pamphlet describing the dangers of tetanus infection. It didn’t describe much else. The second group of people got a description of tetanus infection, plus a set of instructions on how to get vaccinated. The second group exhibited much higher sign-up rate for tetanus vaccination than the first one, where many participants tried to block out the high-fear message urging that something as rare as tetanus would never happen to them.
  9. A small gift makes people want to reciprocate. People who received a small no-strings-attached gift from a stranger were twice as likely to buy raffle tickets from him than those who were just pitched on raffle tickets.
  10. Hand-written Post-It note improves response rate on inter-office letters. Researchers distributed three sets of questionnaires around the office. The first set included a hand-written Post-It note requesting completion of the survey. The second set got the same survey, with the request to return it hand-written on Page 1. Third group got the same survey with their name mentioned (in type) on page 1 of the survey. Response rates? 75%, 48%, 36%. People appreciated personalized approach, and somehow a Post-It note even highlighted the extra work that someone did before sending out the survey.
  11. How restaurant mints are a personalized affair. Let’s a say a restaurant provides mints for its customers on the way out. If the amount of tips per week is the baseline for that restaurant, let’s make the waiters include a mint as they give the check to the customer. The tips go up by 3.3%. However, when the waiters offer the mints themselves, prior to signing the check, the tipping amount went up by 14.1%. In yet another experiment, the waiter would present the patrons with 1 mint per guest, then give them the check, then turning around to leave, then, as if remembering something sudden, turning around and giving them yet another mint per guest. Result? 23% increase in tips, as this signaled high amount of personalization.
  12. Attaching no strings increases response to the message. Using the same hotel as the one mentioned in Chapter 2, researchers tried out two different versions of the sign. The first one: if you reuse the towels, a donation will be made to a nonprofit environmental organization.  The second version: the donation has already been made, since the hotel trusted you’d reuse the towels anyways. Recipients of the second message reused their towels 45% more than the recipients of the first one.
  13. As time goes by, the value of a favor increases in the eyes of the favor-giver, and decreases in the eyes of the favor-receiver. Researchers asked a group of people in the random office environment to exchange favors and then rate the value of the given/received favor in their eyes. A few weeks later the same employees were reminded of the favor, and asked to evaluate the favor again. Favor-givers consistently assigned higher value to a given favor, while as the time passed by, favor-receivers tended to assign lower value to the received favor.
  14. Asking for small favors changes self-perception, introducing ways for big favors. Researchers asked a group of homeowners to place a large “Drive Carefully” sign on their front lawn. Only 17% agreed. With the second group of homeowners, 76% of people were ok with road traffic people maintaining the sign on their beautiful lawns. What was the difference between two groups? A few weeks earlier group B was asked to display a small non-intrusive window sign asking drivers to slow down. This mental foot-in-the-door technique made homeowners from the group B view themselves as socially responsible and safety-aware, hence a request for a larger favor few weeks later didn’t startle them.
  15. Labeling people into a social group tends to increase their participation ratio. A group of people was interviewed regarding their voting patterns. Half of them were told that based on their response criteria, they were very likely to vote, since they were deemed to be more politically active. Later on the election day that specific half did indeed turn up a participation rate that was 15% higher than participation of the control group.
  16. Asking people to substantiate their decision will lead to higher commitment rate on that decision. Researchers called a group of people asking them how likely they were to vote in an upcoming election. Those who responded positively were either asked nothing, or asked why they felt they would vote. Any reason would suffice, but when the election day came, the turnout for the control group (who all responded “Yes” to the question of whether they were going to vote) was 61.5%. Turnout for the group that actually gave a reason (any reason)? 86.7%. A restaurant stopped telling customers “Please call to cancel your reservation” and started asking “Will you call and let us know if you need to cancel?” Net result? Number of reservation no-shows dropped from 30% to 10%.
  17. Writing things down improves commitment. Group A was asked to volunteer on AIDS awareness program at local schools, and was asked to commit verbally. Group B was asked for the same kind of volunteer project, but was given a simple form to fill in. 17% of volunteers from Group A actually showed up to their assigned local school. From Group B 49% of volunteers showed up.
  18. The fact that circumstances changed allows people to change their viewpoints without being viewed as inconsistent. People are generally not thrilled to change their viewpoints on something, as they fear they will display lack of consistency and be called a flip-flopper. Convincing people that their old decision (to stick with the old product) was completely 100% correct under old circumstances allows them to be more responsive to the messages that imply a new product/idea is better because the circumstances radically changed since then.
  19. Sometimes asking people for help makes them more open. Group A was given some bogus research that included a sum of prize money. After the experiment, the researcher approached them and asked whether it wouldn’t be inconvenient if they had to give the money back, since the researcher was using his own money. Group B was not approached with such request after their portion of bogus experiment was done, and was allowed to keep the money. After this both groups were asked to rate their impression of the researcher. Even though it was the first group who didn’t get to keep any money, all of them consistently rated the researcher higher on likability scale.
  20. Asking for little goes a long way. Researchers went door-to-door asking for American Cancer Society donations. Group A just asked for a donation, group B ended their spiel with “even a penny would help”. Results? 28.6% response rate for Group A vs. 50% response for Group B.
  21. Lower starting prices attract higher bids. This is a reference to a study of eBay items where people consistently bid items with a lower starting price higher. The explanation seems to focus on the fact that people invest more time into updating bids for a lower-priced item to let it go.
  22. How to impress a potential customer with credentials without being labeled as a show-off? Public speakers have someone else introduce them, a real estate company made a slight improvements to their phone service by directing people to “Jane, who has 10 years of experience with houses in upper price range”, and physicians display their diplomas on the walls.
  23. The danger of being the smartest person in the room. The expert card frequently trumps any other card in the room. The example here is that the scientists who discovered the double-helix of the DNA were never prime DNA experts, which made them “hungrier” for new discoveries, and made them question established rules.
  24. Devil’s advocate example works with large organizations. Leaders who consistently seek out dissenting opinions earn more respect, and generally have better agreement with people in the room than those who rule by laying down the law and persecuting dissenters.
  25. Negative examples are memorized better than positive examples. When one group of firefighters went through the list of real-life mistakes other firefighters have made, and another group just went through the list of positive things to do, the first group demonstrated better judgment when faced with real-life tests. Our brain seems to discount the best practices, but single out bad examples of someone else making a mistake.
  26. Admitting negatives up-front might lead to better communication. When Progressive says that they will compare your rate against their competitors’, and when original VW Bug was introduced in the US, both companies pursued a strategy of highlighting the negative stuff only to open conversation about the true values their product has to offer.
  27. Spinning negative facts as positive allows customers to make a mental link towards the positive. Among the viewers who viewed an ad advertising restaurant’s cozy atmosphere, an ad advertising the restaurant and lack of parking spaces, and an ad mentioning both, the third group made a connection between cozy atmosphere and bad parking situation. The restaurant was so cozy, the customers reasoned, that they didn’t even have enough parking spots, which made them even cozier in the eyes of a customer.
  28. Admitting you’re wrong makes people trust you more. Company A published an investors relations report, contributing slump in sales to overall economic climate. Company B said slump of sales was relevant to a few bad decisions by top management. Net result? Investors viewed company B more positively. You’d think that they’d be viewed as a bunch of screw-ups, but admission of a mistake made investors more confident the situation was under control, while company A investors got the uneasy feeling of the ship floating in the waters with captain losing control.
  29. Similarities raise the response rate. A person named Cindy Johnson received a survey request by mail from someone named Cynthia Johannson. Someone named John Smith received a survey from Gregory Jordan. The name similarity in the first case (note that it’s just phonetic similarity, none of the names are the same) brought up the response rate to 56% vs. regular 30%.
  30. People like the sound of their name, and that defines their vocation. There are three times as many dentists named Dennis as any other names. Number of Florences living in Florida is disproportionately high, same goes for Louises living in Louisiana.
  31. Verbalization helps interaction. Waiters who repeat customers’ order to them make 70% more in tips than waiters who just say “Okay”. Our mind subconsciously appreciates the effort taken to ensure the things are perfectly right.
  32. Just smiling makes for a poorer customer service. Group A was exposed to a hotel clerk smiling, while peppering the customer with questions regarding their preferences and ways to improve their hotel stay. Group B had just a smiling clerk performing her duties. Group B was more likely to rate the smile as fake.
  33. People pay more for the stuff that’s about to disappear. Oldsmobile sales rose after GM announced the end of life for the line. Australian beef purchases rose after customers learned this year’s supply would be severely diminished because of the weather conditions. Concorde sales took off right after British Airways announced the hyper-speed flights would be shut down.
  34. When people feel something is about to go away, they will stick to perception of the product being better than the new one. In majority of blind tests customers chose New Coke over Classic Coke. Yet when New Coke was introduced, massive protests were staged. When the same drink was packaged into Classic Coke and New Coke bottles, customers still claimed they preferred the Classic Coke and could taste the difference, even though labeling was the only thing that differed two drinks.
  35. “Because” makes any explanation rational. In a line to Kinko’s copy machine a researcher asked to jump the line by presenting a reason “Can I jump the line, because I am in a rush?” 94% of people complied. Good reason, right? Okay, let’s change the reason. “Can I jump the line because I need to make copies?” Excuse me? That’s why everybody is in the line to begin with. Yet 93% of people complied. A request without “because” in it (“Can I jump the line, please?”) generated 24% compliance.
  36. Asking people to choose reasons themselves might backfire. Two groups were given an ad by BMW. Group A saw an ad saying “So many reasons to buy a BMW. Can you name 10?” Group B saw an ad saying “So many reasons to buy a BMW. Can you name 1?” After the ad both groups were asked to evaluate their likelihood of buying a BMW. Similar to what’s described in Chapter 5, people who had to name 10 reasons actually named Mercedes-Benz, a competitive brand, as their probable choice, while Group B named BMW as their likely next vehicle, compared to Mercedes-Benz.
  37. People like stocks with more pronounceable names. Research of stock tickers between 1999 and 2004 looked at the relationship between the phonetic fluency of the stock and its rise through IPO, then 12 months later, then throughout its lifetime. The result? Stocks with more pronounceable names produced higher returns, even though nobody yells out the tickers on the exchange floor anymore.
  38. Rhyming makes the phrases more convincing. People were asked to evaluate the practical value of parables “Caution and measure will win you treasure” and “Caution and measure will win you riches”. In general proverb A was considered to be more practical and insightful than proverb B.
  39. Amount of information is context-dependent. A group of people was given an ad for department store A, extolling in great detail the 6 departments that A had. Another group was given a short blurb on store A, presenting mainly abstract information. After that store B was presented to both groups with information on 3 departments given to both groups. The first group thought they preferred A, since A volunteered more information and B seemed shadier in comparison. The second group did exactly the opposite and preferred store B, which volunteered detailed info on 3 departments, while A’s message was an abstract blurb.
  40. Incentive programs need a good start. A car-wash place gave one group of customers a free car wash after 8 washes, and everybody got their first stamp after their visit. Group B got a free car wash after 10 car washes, with 3 stamps on the card. Both groups needed to make 7 more trips to get a free wash. 19% of the Group A returned, while 34% of the Group B did.
  41. Abstract names allow the customers to come up with reasoning. Crayola found out that naming colors Cornflower Yellow and Kermit Green worked better than no adjectives attached to colors. The more abstract the connection, the better it seemed to work, as people spent mental time working out the connection between the abstraction and the product in their mind.
  42. Ad campaigns that do not incorporate brands tend to not be remembered. A good portion of people when asked which company was represented by a bunny and the phrase “going, going, and going” named Duracell as the advertiser. Duracell sales increased with the launch of Energizer Bunny campaign.
  43. Mirrors make people more self-conscious. A group of trick-or-treating kids was told to pick up one candy from the jar in the living room, while the adult was in a different room on some pretense. Group A had a large mirror placed by the candy jar, group B did not have the mirror. 8.9% of kids with the mirror in the room and 33.7% of the kids with no mirror treated themselves to extra candy. Another group of people was brought in for what was advertised as gel research, and was given a hand paper towel to wipe the gel off while heading for the exit. With the mirror in the hallway, 24% of participants littered, dropping the towel on their way out, with no mirror, 46% threw the paper towel on the floor without bothering to find a trash can.
  44. Negative emotions make people pay more. Group A was exposed to an emotional movie about the death of someone close to the main character. Group B saw no such movie. Both groups were asked then to name a fair price at which they’d buy the object presented to them. Group A tended to give prices 30% above Group B’s.
  45. Tired people tend to be more receptive to arguments. No wonder those magic bullet infomercials run so late at night. Both groups were presented to product demo, and then asked to evaluate the possibility of buying it. Group A was tired and a bit sleep-deprived, group B was in good physical condition. Group A was much more prone to buy.
  46. Caffeine increases the argumentativeness of a strong argument. Group A drank regular orange juice, group B drank orange juice infused with caffeine. Both groups were then presented with a statement on controversial issue. Except one statement then made weak and hasty arguments, while the second statement made a strong case. Both groups equally dismissed the weak argument case. As far as strongly argumentative case, group B was 30% more receptive. A faster-working brain under the influence of caffeine seems to appreciate good arguments.
  47. Face time still beats e-mail time. Group A was given time to get to know one another in person, then resolve a conflict via e-mail. Group B got a similar task, except no face-to-face communications. 6% of the Group As failed to come up at a good resolution, while 29% of Group Bs arrived at impasse.
  48. Individualism is perceived differently in many countries. In US and Western Europe a chewing gum campaign that accentuated “you, only better” seemed to get more success, than a similar campaign in Eastern Europe and Asia, with much more collectivism built into the culture. In those countries, emphasizing that chewing gum was much more tolerable for other people who can smell your breath, was perceived better.
  49. Notion of commitment among various cultures differ. A group of American students was asked to complete a short marketing survey. A few weeks later they got invited for the second survey, which was going to take twice as long. No pay for either survey. The same experiment was conducted among Asian students. The response rates among American students was 22%, response rate among Asian students was 10%. Research suggests that while American students relied only on their own experience, Asian students found out that few of their peers responded to the first request to complete the survey, which triggered their negative response.
  50. Response to voice mail differs among Americans and Japanese. When faced with a voicemail message, 50% of Americans, and 85% of Japanese hang up. Respondents from Japanese test group pointed out the personal touch of the conversation (intonation, pauses, volume) was important to them and impossible to reproduce over voicemail.

If you liked reading review of this book, check out my review of Predictably Irrational, which is written by a psychology professor and explores the topic of human irrationality in our perfectly rational world.

Book review: 13 things that don’t make sense by Michael Brooks

13 things that dont make sense 13 things that don’t make sense by Michael Brooks is a pretty interesting look into the world of scientific discoveries, or lack thereof. Because, you see, there are quite a few commonplace things that we take for granted, but cannot quite explain from the scientific point of view. Sure, you’ll say, it must be some extra-hard scientific stuff, a formula understandable only by an army of advanced PhDs who spend their lives figuring out these ultra-complicated tasks.

Well, not quite. It turns out that life itself is quite a mystery from the scientific point of view.

  1. Life. In theory life in the universe appeared when electric currents went through the masses of hydrogen, ammonia, water and methane, therefore creating something animate out of a set of inanimate chemicals. In practice, for a few decades the scientists have been trying to achieve a similar effect on a smaller scale, but so far no one has been able to produce the Holy Grail – turning something lifeless into something that is actually live, such as a single-cell organism. The life itself, it seems, is a scientific anomaly that should not happen in this Universe according to the existing laws of chemistry.
  2. Death. You’ve heard it before: two things you cannot avoid in life are death and taxes. Well, this is a very human-centric view of things, as it turns out there’s a variety of species (most of them vertebrates) that only get better with age. Some turtles, it seems, only get healthier and produce more children with age. Moreover, scientists are aware only of non-natural causes of their deaths – being run over by a truck or attacked by a bird. Are those turtles immortal, or are we observing just a small stage of their lifecycles (which could eclipse ours by generations)?
  3. Dark matter. It’s not embarrassing for scientists to admit they don’t know something. After all, there are plenty of little details that remain unknown in many branches of science. So not knowing what constitutes dark matter would be an acceptable excuse, if it weren’t for the fact that dark matter comprises 96% of the Universe. We know that the Universe keeps expanding, but we cannot quite describe how and what happens to the space that used to be compacted previously. Dark matter is the giant elephant in the room in discussions related to astronomy or physics – we don’t know what it is, we’ve never seen it, and only infer its existence, yet roughly speaking it’s a major ingredient in the Universe we live in.
  4. Varying constants. Physical constants are warm and fuzzy. We don’t know why they have the value they have, but we always substitute them into our equations and formulas, relying on decades of scientific research behind us, and the fact that they are, well, constants. However, there’s a fairly determined group of scientists that is looking into certain scientific constants and finding that their values have changed as the Universe aged. Determined might be an understatement, as anyone willing to travel to Gabon and mess with uranium there is certainly dedicated. What they’re finding is that the constants describing nuclear reactions were different two billion years ago compared to current constants.
  5. Newton’s inverse square law. In 1994 scientists at Los Alamos National Laboratory figured out they had a bug with Pioneer probes. Contrary to the Newton’s inverse square law, the Pioneers were drifting off course. They hired Slava Turyshev out of Jet Propulsion Lab to investigate the small bug, which was most likely to blame on some contamination or error in Pioneer design. 14 years later the bug still stands unresolved. Together with NASA the scientists have gone through heaps of papers figuring out what could go wrong, and the answer is still up in the air. If unresolved, the Pioneer trajectory might become the first evidence that it’s time to rethink Newton’s inverse square law.
  6. Homeopathy. When it works, you hear all about it. Homeopathy is almost like religion, in the sense that it attracts either staunch believers, or extreme sceptics. The idea of diluting a certain ingredient with copious amounts of water doesn’t sit well with the majority of chemists, who point out that such small proportions call for a chance of the entire solution being water. Nevertheless, in Brooks’ book there’s an attempt at the explanation of what might be causing homeopathic effect – changes in molecular structure of water depending on the chemicals that it’s been in contact with, even if the chemicals have been filtered out. However, it’s still an attempt at best, since the scientific experiments that do achieve positive results are generally not reproducible.
  7. Placebo effect. Perhaps related to the previous thing we don’t understand, placebo effect has some interesting features. The patient knowing or suspecting that they might be receiving a placebo behaves differently than those without any knowledge. Are we comforted by the sight of people in white robes and our local pharmacist dealing out the regular dose of medication? Or does body start producing entirely different set of hormones with mind suspecting that the recovery process is near. Placebo, if figured out, might become a huge money saver with the current drug prices, and hence attracts scientific research. The only thing missing? A definitive conclusion on the placebo effect.
  8. Free will. A certain amount of human ideology rests on the idea of free will. So the idea of the body just reacting to some responses outside of the brain is uncomfortable. But picture this. You’re in bed, it’s time to get up, yet you want to spend a few more minutes in bed. Your conscious mind is sending the signals for the body to get vertical, and yet at some point, probably between the thoughts of pending shower and commute to work, you get up. The final decision done by something unconscious, something you don’t really have control over. While your conscious mind can submit an application to this unknown organ and request something happening, the body movements and behavior are triggered by something that is still largely unknown for science.
  9. Cold fusion. It became one of the most ridiculous scientific ideas to get associated with, and no scientist would touch it nowadays with a 40-foot pole, since it brings the stigma. However, as some point out, peer pressure is pathway to missing out on some potential innovations in the field. What’s currently reproducible is the effect of cold fusion on a plastic called CR39. Placed by a piece of depleted uranium, CR39 shows similar patterns of radiation as placed into a cold fusion experiment.
  10. Life on Mars. The Viking probes were declared to contain no evidence of life on Mars. The only person in the room who disagreed with the announcement was a bacteriological researcher, who came up with a clever idea of detecting life (fart reference coming soon). By adding radioactive isotopes to the nutrients fed into the foreign soil, the researchers would get any evidence of carbon-based life to produce gas (there it is), and by the virtue of having the food injected with isotopes, the Geiger counter would go ballistic, and hence you could validate existence of life in the soil, even if other tests came negative.
  11. WOW signal. One would argue that scientists at SETI (Search for Extra-Terrestrial Intelligence) have a pretty monotonous job. They’re waiting for a signal on 1420 MHz frequency. Why 1420? That’s the frequency of hydrogen, the most prevalent element in the Universe, so hopefully those extra-terrestrials will arrive at the same idea when sending the signal. So far no signal has arrived. Except on August 15th, 1977, when the signal came. It was very distinct, and caused Jerry Ehman to write "Wow!" on the margin of the printout. The signal never repeated, and the SETI folks have not heard anything similar since then.
  12. Mimivirus is an interesting virus that does not seem to affect humans, except for the unique cases, when it actually does. It’s the virus that fight cancer cells among others, and hence draws a great deal of research attention.
  13. Sex. If you’ve read this far, here’s a bonus entry. Yes, sex is one of those things that scientists do not quite understand (insert a proper nerd joke here). Looking at overall picture, the animal kingdom provides a great variety of alternative means of reproduction, that are much more efficient as far as number of offspring and the quality of gene preservation. A number of reptiles and fish are all-female or all-unisex species, copying themselves for the purposes of reproduction. Moreover, a number of species, like water fleas, can reproduce either sexually or asexually. You’d think that the species produced through asexual reproduction would be somehow inferior to the ones that appeared as a result of a sexual act, but there’s no solid scientific data to prove that or the opposite. What remains enigmatic is that if asexual reproduction would provide you with 2x the population compared to sexual (and that leaves out the time and energy spent on finding a mate, taking her to dinners and consequent ring shopping), why didn’t the entire animal world switch to asexual, as it’s obviously a more efficient process.

What I learned about timeshares, and you can, too

Last weekend my wife and I spent a weekend in Las Vegas, with the cost of the hotel partially offset by having to visit a time share presentation. Anybody who has hit a certain income level has probably received a call from a timeshare company at least once, offering a free vacation, free hotel stay, or some other nice-sounding perk in exchange for visiting a “no-strings-attached” presentation. There’s nothing wrong with signing up for those perks, as long as you know what to expect, and what to do during one of those presentations. Here’s some random tips that I gathered after attending a few of those.

What are timeshares?

Whenever a real estate developer builds one of those nice towers in a highly touristy place like Orlando, Las Vegas, San Diego, etc., they would like to sell those condo units to interested parties. However, unless you happen to live in a highly touristy place, your interest in purchasing one is probably quite minimal. Spending vacation there, however, is another story. Hence the timeshare company breaks up a single condo ownership into roughly 50 weeks. Buying a timeshare entitles the owner to one week at the aforementioned property, with 1-2 weeks of the year left for various maintenance work, like replacing the carpet, or installing a new dishwasher.

Ok, I get it, so you buy a week?

The weeks sold can be of different variety, and sell for different prices. It’s a no-brainer that being in Las Vegas for New Year’s or at Lake Tahoe in the midst of the ski season beats Las Vegas in July, or vacationing in Florida during hurricane season. Not all weeks are created equal, and companies selling timeshares know that. They apply different pricing to their weeks, marking them as peak, high and low season. Naturally you pay less for a low season week than what you pay for a peak week.

Some trickier ones (like Westgate) tell you that they’re selling a floating week – the week you can use whenever, as long as you call the company in advance. The trick here is that the concept of peak weeks still exists, and you’ll be charged extra for it.

Some get even trickier, and sell you points. Points are assigned to your account, as you’re making your regular timeshare payments, and they generally seem lavish, as you’re told that you’ll be given 500,000 points each year, which you can then use to reserve the weeks and properties you’re interested in. Naturally, peak weeks cost more points, and generally the only way to get more points is either to skip the vacation this year, and let those points accumulate, or pay up to get more points.

Wait, did you say you could reserve other properties?

As going to the same spot will eventually get tiresome, timeshare companies are doing two things to add variety to your future vacations.

Number one: you can generally work out a deal to stay at a property belonging to the same company, if someone else wants to exchange. This might or might not cost extra, and usually involves calling the company, and letting them know which one of their other properties you’d prefer to visit. During the presentation the sales rep will make it seem as easy as it can be, but note that generally everybody wants to take their vacation during the peak seasons, nobody wants to go on vacation during a dead season. So when you call up the company and tell them you’d like to exchange your Orlando time share for a week in company’s San Diego property, people who own that timeshare in San Diego get a higher priority than you.

Number two: there are brokers on the market, like RCI or Interval, which work out deals for timeshares belonging to different companies. They charge for their services, as they’re not affiliated with the resort developers, but they do allow traveling internationally, since their directories generally include thousands of participating resorts.

What you will be told at a timeshare presentation

  1. The general script of any timeshare presentation I’ve been to starts with the sales rep asking the couple to list their favorite vacation spots. You’re told that this will be used for research on where to build next vacation spots, and those destinations will reappear in the conversation, as the sales guy as making a pitch on exchange programs (see above). If you feel like disrupting that part of the presentation, tell them your vacation destinations for the near future include Nepal, Greenland, and Iraq.
  2. You will be asked about the vacations you took. From here the script diverges two ways. One – the easiest – is if you haven’t taken any vacation, obviously money is the problem, and the timeshare company is here to help. Second – you list the vacations or trips you took over the past 12 months – involves tedious calculation of how much you spent for it.
  3. This is where it gets interesting – you will generally be asked to quote the entire price of vacation. In future comparisons these numbers will be used to compare with timeshare costs, and how much money you could’ve potentially saved, but you’re rarely asked to break down the price of airfare, hotel, and attractions. Most vacations are bought as packages, so rarely you have a clue as to what the exact cost of the component was. Usually you and the sales rep begrudgingly agree that you probably spend $180-200 for that hotel room.
  4. If you spend two 6-night weeks on a vacation every year, that means $2,400 of your budget goes towards paying for a hotel (12 nights at $200 each). So far so good. So what’s that going to be over the next 25 years? Well, you say, looks like $60,000 to me. And are the prices of hotels going to decrease or increase, asks the rep. You’re no fool, you know inflation theory, and you’re pretty sure it’s only going to increase. Is it fair to say that the prices of hotel rooms will be double of what they are now in 25 years? Year, pretty reasonable. Boom! Your sales rep multiplies everything by 2, and you’re obviously going to spend $120,000 on just hotel stay in the next 25 years. I will let you figure out what’s wrong with multiplying the whole sum by 2.
  5. At this point you’re probably indignant at hotel companies and yourself. Well, it turns out, your sales rep informs you, that you never get that money back. You’re just giving the money away without getting back anything, but a bag of receipts. You’re renting your vacation, spending $120,000 on it in the course of the next 25 years, and receiving 0% return on investment on that money.
  6. Introducing the concept of vacation ownership. Each timeshare company claims to have invented this, and according to sales rep, it’s only due to the goodness of their heart, helping doofuses like you and me save that $120,000 over the next 25 years, and also get something back in return. For something like $150 a month, you can be a proud owner of your vacation.
  7. At this point it totally makes sense. Why throw your money away to evil hotel companies, when you can be an owner of your own week, be able to own it forever, and gift it to your children, if you choose to (this concept of gifting or willing comes up often).

So why doesn’t it make sense?

The financials presented sound pretty good, right? Generally if you look at the pure numbers, they come to around $60-70 a night, generally pretty competitive rates when you line up the hotels in the same area. Well, the secret is that there are two kind of fees – your timeshare payments and maintenance fees.

The payments go towards collateral and interest (if you chose to finance), the maintenance fees go towards hiring people to maintain the resort (duh!) While your monthly payments are set in stone (a contract, that is), maintenance fees fluctuate from year to year, or so you’re told. Well, unless you’ve witnessed a strike of maintenance workers asking for lower wages, there’s only one way they can fluctuate – up. Those fees are applicable even if you decided to skip vacation for a year, either due to time constraints, or desire to accummulate points. Also, maintenance fees never go away. Even if you’re completely paid up on your timeshare payments, the maintenance fees still have to be paid. If you gift the paid-off timeshare to anybody, they will be stuck with maintenance payments set by the resort.

Another highly objectionable technique used by timeshare companies is points inflation. As the years pass by, and you keep paying stable payments and rising maintenance fees, you will find out that either you get fewer points for your money (few companies do this, as this is pretty obvious attempt) or things cost more and more points, requiring you to buy up some extra ones each year. Combine the payments + maintenance fees + any points fees or any peak/high week fees, and you’re most likely looking at $150-200 a night, the exact price quoted to you by the sales rep, only in reference to the evil hotel industry.

So does it ever make sense to buy a timeshare?

Generally the high dreams of getting any return on investment never materialize, as deteriorating properties require higher maintenance fees each year, and there are always more people selling timeshares than buying them. However, does it make any sense to get one?

  1. It seems to be a reasonably good deal for large families, or families taking vacations together. Since most of the timeshares can accommodate two families, in price comparisons you’re looking for 2 hotel rooms or hotel suites, which generally cost much more. But even then, your costs may very.
  2. It seems to make sense if you have any recurring travel. Every year I go to a conference in Las Vegas that always happens to be during the same week. But even then a timeshare would not make sense for me – the week is in August, when hotel rooms are cheap, and the conference might move to another location, which would imply getting a different hotel that year.
  3. If you happen to have a week in a property that someone else wants to buy out, you might make some money. But even then the investment return will most likely be obliterated by various fees attached by timeshare resorts.

When you think that getting (or not getting) one might make sense for you, make sure to check eBay Timeshares, Sell My TimeShare Now, or places that rent timeshares just to get sense of the going market rate. From reading the forums, it looks like the biggest mistake one can make (outside of buying a timeshare) is buying it retail as a result of a high-pressure presentation, that has a special rate going on that’s going to expire today (isn’t that convenient).

Another good place to do some reading is tug2 – forums for timeshare owners, run by people who actually bought timeshares, not companies that sell them. There’s apparently also a huge market to get rid of timeshares, and Timeshare Relief is the primary buyer for those. Most of people unloading timeshares are willing ti give them away for any price, just to get rid of high maintenance fees and property taxes, and hence you can frequently get a bargain if you’re looking for a secondary market timeshare. Vacation Rentals by Owner site will give you a good idea of what the vacation spots rent for in the markets you’re looking at – would suck to get a timeshare costing you $2,000 for the week, when larger vacation houses rent for half the price at the same location.