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The World Health Organisation (WHO) has recently published a report on the implications for human health of consuming processed meat including bacon, hot dogs, ham and sausages. Americans consume on average 18 pounds of bacon a year. How rational/logical are consumers though when taking the decision to consume these products?

Traditional Economics have long supported the theory of consumers being rational every time they make purchasing decisions.

What exactly is rationality though? This involved decisions made based on perfect knowledge about the products we consume, out of which maximum utility/satisfaction is derived.

Is eating bacon rational then? Based on the information recently released by the WHO, consuming bacon is anything but rational.

Why? When consumers enjoyed eating bacon and any other forms of processed meat, they certainly didn’t know the true implications it had on their health. For this reason since decision making was based on imperfect information, someone could argue that eating bacon is irrational.

Irrationality arises when consumer’s decisions are dominated by computational weakness. This occurs when consumers find it difficult to calculate the probability of getting bowel cancer through the consumption of bacon in the future. They often underestimate the impact of processed meat on their health, on a later stage of their life. As a result they make an irrational decision to eat bacon.

Taking it further

Bacon is just an example of irrational decision making. There are many other examples which illustrate our weakness to make rational decisions. From bacon to electricity providers, there are millions of decisions we take every day which are based on inaccurate/imperfect information or the overload of information which might be presented to us, making it impossible to choose what is best for us. Adding to these, the influence of other peoples’ behavior and the habits we are not willing to change leads to irrationality as well.

In the UK, consumers find it hard to choose among the different electricity providers. This is due to complexity of the information presented to them, on their monthly tariffs. A possible solution to this problem could be an online platform comparing the tariffs offered by all electricity suppliers, to make it simpler for consumers to compare and decide.

Further reading

World Health Organization: Processed Meats Cause Cancer (The Huffington Post)

Processed meats do cause cancer - WHO (BBC News)

Energy switching: Why the customer inertia? (BBC News)

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