Tuesday, August 23, 2005
The Questionable Wisdom of Markets
In the comments to this post about tort reform, Jody writes "if the market wants a thousand varieties of Viagra, then that's what the pharmaceuticals should produce," and his idea seems to be that markets will demand (and companies should produce) objects with high utility. I don't know enough about utility theory in economics to argue about this theoretically, but I think he's assuming consumers are more rational and better informed than they actually are. I can offer one concrete counterexample from personal experience, and that's the HDTV market.
I bought an HDTV about three months ago, and did a reasonable amount of research before buying. I ended up getting a Toshiba 52HM84, which is in the midlevel of DLP televisions (it had to be DLP, because I wanted to play games on it without getting burn-in; a risk with plasma and LCD screens). In any event, I didn't know everything there was to know about HDTVs when I bought it, but I did know more than most people. Three months later, I know a lot more than I did, and it's led me to the conclusion that markets, at least for high-end consumer goods, absolutely do not select for utility, at least not when the object has already been purchased. Instead, they select for the best qualities of the object when it is being sold. These are not the same thing by a long shot.
Show rest of post
In the television market, consumer TVs are built incorrectly in a way that is very specific to how they are sold. Most people, when buying a television, look at a lot of TVs on display and look for the sharpest, brightest picture, whatever looks right to them. As you probably know, video signals, from DVDs to video games, are supposed to be mastered to a particular color space; the NTSC standards (in theory) define what that space is. In a properly designed television, the hue and saturation of, say, red, will exactly match the red on film or whatever the original source material is. To put it simply, the colors should look the same from television to televison. However, when a television is sitting in a row of twenty TVs, the lighting conditions (the fact that the other TVs are also spitting out light and color) mean that a correctly designed television will look a little washed out. It will look a little washed out not only because it is surrounded by light-emitting televisions, but because the televisions that surround it have all been designed to overemphasize reds and wash out greens. That's right, they're deliberately designed to incorrectly interpret color signals because they look better that way in the showroom. And once one television manufacturer started building their decoders incorrectly, the other manufacturers had to follow suit, or they'd be building the dull looking TVs in the display row. This is an example of the market selecting for a bad thing. Unless you define anything markets select for as a priori good, and that seems silly to me.
In most cases, the incorrect color decoder is limited to a particular "mode" of the television--on mine it's called "SPORTS MODE." Which, in theory, is designed to make sporting events look better on TV. In practice, however, it pushes the reds way out and screws up greens and blues something awful. There's nothing wrong with having a display mode for selling TVs, as long as it's something you can turn off. And you can; by setting the Toshiba to "Warm" color temperature and "Cinema" color mode, you get to something closer to NTSC standards. However, the red levels are still too high; whether this is because Toshiba wanted to be sure that their TV would look better in showrooms even if the video store guys configured it correctly or what, I don't know, but it's no good.
The market in this case has also selected for a uniform set of controls and adjustments on every TV. This makes sense from a utility standpoint; learrn to adjust one TV, and you can understand them all. However, the picture controls on a color television set were designed to match the peculiarities and limitations of CRT technology and early television broadcasts, and having the same controls on a DLP, LCD, or plasma screen sacrifices usability for familiarity. Having only one color and hue adjustment, for example, instead of separate controls for red, green, and blue levels is not very useful on televisions in which these colors can be treated separately. And having a sharpness control doesn't make any sense at all--on most screens, it should be set to zero, since it artificially sharpens the image, adding data and artifacts as it goes. Of course, some TVs have been designed to make the sharpness control seem more like the sharpness control on TVs of yore: set to zero, the TV artificially softens and blurs the image. So on those tvs you've got to find where they've set the real zero point, where the image isn't processed further.
What I want, and what it seems to me that a rational market would select for, is a combination of DVD and television equipment that allows me to see movies in the color space at which they were mastered, with a minimal amount of further image processing and the artifacts that introduces. But thanks to the peculiar way televisions are displayed in stores, that is much harder than it looks--and in this case, the market has selected for things that would not make sense if televisions were sold differently. From what I can find, the last consumer-grade color televisions to correctly decode color to NTSC standards were very nearly the first, built sometime around 1955.
I think, at least when dealing with goods that are bought once and rarely, markets tend to make much poorer decisions than one would want, because the evolutionary process of consumer goods has more to do with the process of buying them than with their use once purchased. It seems to me that this is probably also true of high-end medical goods, which makes me skeptical of market-based solutions for, say, finding the best artificial heart.
Side Note: I'm not an expert in HDTV by any means, and if any of you are and can give me advice in the best possible configuration for my equipment, please let me know. Specifically, I'd like to know whether I should send color information from my DVD player to the TV as
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I bought an HDTV about three months ago, and did a reasonable amount of research before buying. I ended up getting a Toshiba 52HM84, which is in the midlevel of DLP televisions (it had to be DLP, because I wanted to play games on it without getting burn-in; a risk with plasma and LCD screens). In any event, I didn't know everything there was to know about HDTVs when I bought it, but I did know more than most people. Three months later, I know a lot more than I did, and it's led me to the conclusion that markets, at least for high-end consumer goods, absolutely do not select for utility, at least not when the object has already been purchased. Instead, they select for the best qualities of the object when it is being sold. These are not the same thing by a long shot.
Show rest of post
In the television market, consumer TVs are built incorrectly in a way that is very specific to how they are sold. Most people, when buying a television, look at a lot of TVs on display and look for the sharpest, brightest picture, whatever looks right to them. As you probably know, video signals, from DVDs to video games, are supposed to be mastered to a particular color space; the NTSC standards (in theory) define what that space is. In a properly designed television, the hue and saturation of, say, red, will exactly match the red on film or whatever the original source material is. To put it simply, the colors should look the same from television to televison. However, when a television is sitting in a row of twenty TVs, the lighting conditions (the fact that the other TVs are also spitting out light and color) mean that a correctly designed television will look a little washed out. It will look a little washed out not only because it is surrounded by light-emitting televisions, but because the televisions that surround it have all been designed to overemphasize reds and wash out greens. That's right, they're deliberately designed to incorrectly interpret color signals because they look better that way in the showroom. And once one television manufacturer started building their decoders incorrectly, the other manufacturers had to follow suit, or they'd be building the dull looking TVs in the display row. This is an example of the market selecting for a bad thing. Unless you define anything markets select for as a priori good, and that seems silly to me.
In most cases, the incorrect color decoder is limited to a particular "mode" of the television--on mine it's called "SPORTS MODE." Which, in theory, is designed to make sporting events look better on TV. In practice, however, it pushes the reds way out and screws up greens and blues something awful. There's nothing wrong with having a display mode for selling TVs, as long as it's something you can turn off. And you can; by setting the Toshiba to "Warm" color temperature and "Cinema" color mode, you get to something closer to NTSC standards. However, the red levels are still too high; whether this is because Toshiba wanted to be sure that their TV would look better in showrooms even if the video store guys configured it correctly or what, I don't know, but it's no good.
The market in this case has also selected for a uniform set of controls and adjustments on every TV. This makes sense from a utility standpoint; learrn to adjust one TV, and you can understand them all. However, the picture controls on a color television set were designed to match the peculiarities and limitations of CRT technology and early television broadcasts, and having the same controls on a DLP, LCD, or plasma screen sacrifices usability for familiarity. Having only one color and hue adjustment, for example, instead of separate controls for red, green, and blue levels is not very useful on televisions in which these colors can be treated separately. And having a sharpness control doesn't make any sense at all--on most screens, it should be set to zero, since it artificially sharpens the image, adding data and artifacts as it goes. Of course, some TVs have been designed to make the sharpness control seem more like the sharpness control on TVs of yore: set to zero, the TV artificially softens and blurs the image. So on those tvs you've got to find where they've set the real zero point, where the image isn't processed further.
What I want, and what it seems to me that a rational market would select for, is a combination of DVD and television equipment that allows me to see movies in the color space at which they were mastered, with a minimal amount of further image processing and the artifacts that introduces. But thanks to the peculiar way televisions are displayed in stores, that is much harder than it looks--and in this case, the market has selected for things that would not make sense if televisions were sold differently. From what I can find, the last consumer-grade color televisions to correctly decode color to NTSC standards were very nearly the first, built sometime around 1955.
I think, at least when dealing with goods that are bought once and rarely, markets tend to make much poorer decisions than one would want, because the evolutionary process of consumer goods has more to do with the process of buying them than with their use once purchased. It seems to me that this is probably also true of high-end medical goods, which makes me skeptical of market-based solutions for, say, finding the best artificial heart.
Side Note: I'm not an expert in HDTV by any means, and if any of you are and can give me advice in the best possible configuration for my equipment, please let me know. Specifically, I'd like to know whether I should send color information from my DVD player to the TV as
- YCbCr (4:2:2)
- YCbCr (4:4:4)
- 0-255 RGB
- 16-235 RGB
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