Kickstarting Boycotts (and the early actor problem)

The following article is a set of reflections on an idea I had recently for a boycott system implemented like a kickstarter, where the boycott only comes into effect once enough people sign up and is enforced at the bank level. With the idea being that the inconvenience to the consumer is essentially zero as most likely the recipient of the boycott would bow to the demands long before the threshold was reached.

Several years ago whilst studying I went through a phase, albeit a rather weakly attempted one, to try and avoid any sort of single-use plastics. It turns out in London this is easier said than done, given time, finance and really just personal energy constraints my attempt ended up being, (like many vegetarians before me), rather short lived.

What I discovered through this experience, however, was really the myth of “democracy” through consumer “choice”. The general argument that should consumers prefer some option in a product (environmental or otherwise) the market will naturally be pushed by their subsequent purchasing decisions. Unfortunately, this is simply not the case, largely for two reasons which here I will refer to as the “early actor cost” and more famously the “tyranny of the minority”.

The first of these issues is quite simple. Take the example of sandwiches packaged in cardboard with those little plastic cutouts so you can see the food before you buy. If it weren’t for this little window the cardboard packaging would not have violated my no plastic rule, but given its prolificacy it’s almost impossible to buy a sandwich from the supermarket without also purchasing said plastic square. The consumer freedom model would suggest that the consumer would indicate their preference by not purchasing sandwiches with plastic windows, however, this ignores the obvious lack of choice. There simply is no sandwich without a plastic window unless I pay a cost premium and buy my sandwich elsewhere. Of course, if enough consumers paid this cost eventually supermarkets would catch on and remove the plastic, never to be ones to miss out on profit. But this requires a certain exodus of people to care enough to overcome this initial inconvenience/cost hurdle.

This initial hurdle defines what I mean by the “early actor cost” and really underpins the problem with boycotts in general. The “pain” required by the consumers to cause a change in the supermarkets’ habits is greater than the longer-term pain they will feel if the supermarket was to make the switch, impeding the efficiency of the free market of consumer choice.

The natural response to this issue I would imagine would be that the supermarkets don’t just dictate their actions solely through customer pressure through purchases, but also through research into customer sentiment. Let’s say a supermarket would sell more sandwiches if they were to remove plastic windows, you could assume that they, through focus groups or other research methods, would realise this and make the switch without direct customer purchase habits. However, this nicely leads us to our second problem, “tyranny of the majority”.

Following on with the same example, let’s now imagine that 80% of consumers would slightly prefer sandwiches without windows for environmental reasons but 20% aren’t bothered by it. Now let’s say removing the windows by a small amount increases the sandwich purchases of the 80% but massively decreases them for the 20%. Overall the more profitable option for the supermarket in this case would be to keep the little windows, essentially bending to the preference of the minority.

This issue by itself is not a flaw of the system, in fact this is exactly how the system is designed to behave. Unlike political democracies, where each person’s opinion is weighted most often by a binary value, either yes or no, in the free market people can weight their opinions by how much value they are willing to spend. Which of course is why the opinion of the 20% is more important than that of the 80. This system may be the best for maximising profit, but as we can see with the epidemic of single-use plastics it’s not always the best system by other metrics (namely environmental damage amongst others).

So how can we modify the system while avoiding the above two hurdles? Well (and this really is the crux of this article) one solution could be to provide a system of boycott that is enacted similar to a kickstarter. Whereby, when someone signs up to a boycott it only becomes active once a threshold number of other people have also agreed to participate. Assume for now that we have solved the enforcement issue, it’s easy to see that this massively decreases the cost to the consumer of participating in this market pressure. Let’s say the threshold for a boycott of supermarkets selling sandwiches with plastic windows was 1 million participants after which all participants would no longer buy from those supermarkets. Assuming the supermarkets believed the participants would actually follow through, then long before the threshold was reached it could be assumed that the supermarkets would have changed their sandwich products to be within compliance. This is because presumably the loss of a million potential shoppers across all products is far greater than the influence of the minority on the original sandwich profit margin. So we can see the only real cost to each participant would be clicking a button to “sign up”, they never actually have to suffer the inconvenience of the boycott.

So how could we enforce this “threshold boycott”? The easiest way I can see would be to enforce at the banking level. Essentially consumers in their banking app can sign to participate in a boycott (imagine Revolut or something similar) where once enough people have signed up the bank would simply block transactions the consumer tried to make to the merchant. Of course there are ways round this for a determined shopper, but overall the friction it would cause consumers in interacting with the merchant would already be enough pressure to make the merchant bend, as long as the demand is sufficiently reasonable. For this reason it would be incredibly important that any proposal was designed such that there is a high certainty of the merchant bending to the boycott long before it ever became enacted. If the boycott was to come into effect this would probably dissuade participants from engaging in further boycotts out of fear of a bad experience. Additionally, some party would have to be designated to decide whether or not the merchant had met the demands.

The importance of this strict enforcement cannot really be overstated here. If there was no enforcement mechanism the free rider problem essentially negates the entire endeavour. Realistically if a million people agreed to not buy from supermarkets unless they removed plastic windows from sandwiches each participant would have no way of knowing that the others would follow through, and so the merchant could feel pretty confident that it’s unlikely participants would enact their threat to not shop with them.

The implications of what a mechanism like this would do to the system are quite interesting to imagine. The most obvious result is that we have moved from a “value weighted vote” through a consumer’s wallet to a simple binary vote on each issue where each consumer gets exactly one vote by weight in the outcome. In the sandwich example we can imagine if only 10% of people actually cared about removing plastic packaging this could still be enough participation in a boycott to push the supermarket to change. However, if another 20% for some reason were really intent on keeping the plastic they could run their own boycott and the optimal decision of the supermarket would be to bow to the boycott with the greater participation.

In this example it might be strange to imagine, however, that a large number of people would care enough about the removal of plastic packaging in sandwiches to oppose the change, which at first might seem to contradict the original tyranny of the majority example. This paradox exposes another change outside of vote weighting in this new system. In the current free market the supermarkets are incentivised to offer the products that will maximise overall profits and this is based on purchasing habits. These purchasing habits though are both influenced by a consumer’s rational preferences but also their subconscious decision making. The 20% of people who may buy less sandwiches that don’t have a little window to see the food are likely not doing so because they care about the window itself, but rather just because subconsciously they are less likely to buy food they can’t see directly. Here lies the important distinction. When engaging in a boycott participants are presumably likely to base their participation on their conscious preferences and less on subliminal preferences and marketing.

I think it’s easy to imagine that this shift to solely conscious decision making by consumers would largely benefit the consumer and disadvantage the merchant. However, the loss of a weighted vote; no longer basing a consumer’s vote depending on how much they “care” about an issue likely removes some efficiency in the system. And so I would leave that as an open question: is there some way to combine both systems where we can still maintain weighted votes but also avoid unconscious biases and the “early actor cost”?