by Jurgen Brauer, May 2004
Copyright: J. Brauer. No reproduction without permission.

Why do so few people ever change their mind? One answer lies in what economists call switching costs.

Why do so few people ever change their mind? Students, who are in college for the purpose of changing their minds, come out the way they went in. People faced with facts plainly contrary to their point of view refuse to change their opinion. Why? One answer lies in what economists call switching costs. It is expensive to discard a point of view in whose acquisition one has invested considerable resources - and to switch to another point of view that requires further outlays to understand and articulate it. This is easily understood if you think of computer programs. The first word processing program I learned was a product called WordPerfect. I am thoroughly familiar with it, and I can do marvelous things with the program. In contrast, I am barely familiar with Microsoft's Word software even though it is now the dominant word processing software. So long as WordPerfect serves me well enough, I do not wish to incur the switching cost to learn Word.

Companies cleverly exploit people's aversion to switching. Take the case of the ubiquitous Acrobat Reader software for which the company does not charge. For the user to Read online documents requires that a provider Write the document. The Acrobat Writer software however is not free of charge. Users of the Writer software encounter a switching cost problem: if they switch to a different writer, few will be able to read the resulting document. Adobe knows this and reflects this in the price it charges for its Writer software.

Why do the English drive on the "wrong" side of the road? Why do Americans use cumbersome non-metric measures such as miles and pounds and degrees Fahrenheit? Switching cost. Once one system is learned, why incur the cost of learning another one? A bad system can amble along and survive if the cost of switching to an alternative is high.

Because switching is expensive, competitors facilitate it by fully or partially subsidizing the cost.

Because switching is expensive, competitors facilitate it by fully or partially subsidizing the cost of switching. Hence the free product samples you get in the mail or at the mall. Your resistance to change must be overcome by offering an inducement.

In the old days, marriage dissolution was rare – even for bad marriages – because the social cost of switching to another partner was high. Today, the cost of switching is low and an economist would expect higher divorce rates. It is not that marriages today are worse than they used to be, or that social mores have declined. It is that the social cost of switching has declined.

The opposite of facilitating switching with free product samples, no-fault divorce laws, and the like, is to punish switching or to increase the switching cost. For example, states proclaim rights over people born to their territory and are loath to let them go. States make the cost of switching one's nationality high. Genetically, and in our humanity, we are much more alike than states would have us believe. But states make switching hard, binding us into artificial communities, creating tensions among us that would not exist if switching were easier.

The cost of switching one's identity also is high. If I were simply a person instead of a black or white person, my local government would not waste so much time, money, and energy on racial politics as it does. Politicians constantly want me to be someone I'd rather not be. They want to hold on to me as black or white while I'd rather switch to be neither. But switching to a "non-group" – a person – can result in costly isolation. What appears to be an association (white with white, and black with black), is a way by which leaders can prevent dissociation.

Switching can be facilitated; it can also be punished. Religions welcome the converted, as they condemn the apostate.

Dissociation is made costly. If you switch your nationality, you lose your birth heritage. If you switch your identity, you are marked a traitor to your group. Religions welcome the converted, as they condemn the apostate. Inducement and punishment are sides of the same coin. Once the idea crosses our mind, switch prevention or facilitation finds a wide range of unexpected applications. This is the beauty of strong concepts with which to ponder the world.