The news item dominated the New York Time's "Most Popular" list for weeks: For your dishwasher's sake - go easy on the detergent. According to the authoritative appliance repairman cited by the Times, “Most people use 10 to 15 times the amount of soap they need, and they’re pouring money down the drain."
Wait a sec - if there's one thing that economists agree on, it's that people never knowingly pour money down the drain. So what's going on?
The detergent manufacturer representative contacted by the Times suggested that people just need follow the instructions on the soap container.
Really? I present Exhibit A: The Measuring Device
This is a cap provided by a major manufacturer for measuring detergent. The crudely drawn line represents the recommended amount for a large load.
First point: The indicators provided by the manufacturer are almost impossible to read. The lines and numbers, faintly visible in this picture, are very hard to see when peering down into the cap in a moderately-lit laundry room.
Second point: the recommended amount is only half the size of one cap load. A person who doesn't take care to read the instructions carefully will assume that one cap=one load and end up using twice the manufacturer's recommended amount.
Third point: the shape chosen for the cap is one that encourages excessive use of laundry detergent. In a British Medical Journal study on the relationship between shape of glass and amount of alcohol poured, researchers found that:
Despite an average of six years of experience, bartenders poured 20.5% more into short, wide glasses than tall, slender ones; paying careful attention reduced but did not eliminate the effect.
Scoops provided for measuring detergent are generally short and wide rather than tall and slender, encouraging use.
In one sense the explanation for manufacturers' encouragement of excessive detergent is obvious: they make more money by selling more soap.
Yet there are some objections to this explanation. Encouraging excess soap consumption is like increasing the price of detergent. Couldn't manufacturers just encourage consumers to use the right amount of detergent and charge a higher price instead?
My (untested) theory is that, when people buy detergent, they compare prices, and buy the detergent that provides an acceptable quality of wash at the cheapest price per load. They calculate price per load by looking at the information on the package "washes 62 loads" for example. A manufacturer who charges a low price and promises 62 loads will sell loads of detergent - and if customers use twice the recommended amount, they will soon coming back for more.
Is this a convincing explanation? I'm not sure. Using too much detergent is not good for clothes, so one would think that a manufacturer that encourages optimal detergent use would win out in terms of care of clothes.
Another theory is that perhaps these misleading scoops are a form of price discrimination. People who really care deeply about clothes, laundry, and money will take the time to measure detergent accurately, whereas people who don't, won't. Hence this is a way of charging more to careless consumers.
Honestly, I don't know why manufacturers do this - I just wish they didn't.
And now lunch break is over, time to get back to STATA.
Update: after reading the comments below, I'm convinced that the detergent manufacturers' strategy is essentially a form of planned obsolescence, a strategy that encourages consumers to make frequent repeated purchases. There is a large literature on planned obsolescence, for example, this paper, most of which points to the importance of market power.
So, for example, Microsoft has an incentive to make Word obsolete, because people will then buy new versions of Word, and there is only one seller of Word: Microsoft. So Microsoft makes money. If there were many competing manufacturers of word processing packages, Microsoft wouldn't be so keen on making Word obsolete, because it would risk losing consumers to another producer.