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Where consumer satisfaction fails

January 28, 2015

In the ideal market of the economist, consumer satisfaction is all that matters. You like your iPhone, she likes her Samsung, you both benefit from market diversity, and companies win by chasing the varied things people want.

In American medicine, patients are more satisfied when they get more tests, spend more money, and receive more prescriptions. And those patients die sooner than the patients whose grumpy doctors refuse them what they want. Yes, Virginia, there really are markets with information asymmetries that make most consumers poor judges of the quality of service they receive, and where getting more of what they want hurts them. The large study on this was published two years ago.

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