Posted on: Tuesday 3rd of May 2011
I’ve been looking again at the new EU Barometer on Consumer Empowerment and I’m not impressed. It makes me realise how different definitions of empowerment can be. In my view, the EU’s definition of empowerment (see ‘Barometer Model’ below) is narrow to the point of misleading.
It focues on three broad pillars of empowerment: skills (such as the ability to calculate interest rates), awareness of legislation (e.g. money back guarantees), and behaviours (such as ‘reading terms and conditions’).
This definition of empowerment has three characteristics.
First, it is highly individualistic, pitting the individual against the organisation (with only one small nod to organised or collective approaches with its category ‘tendency to talk’).
Second, its emphasis on awareness of regulatory rights makes empowerment feel more like a law exam than something real people do.
Third, the entire approach is ever so ‘rational’ – using the word ‘rational’ as 20th century economists did, to describe an abstract notion of how people ought to behave (collecting all the facts, weighing pros and cons, etc) which has very little to do with what real people actually do. For example, how many real people bother reading terms and conditions or investigating the details of “programmes related to consumer rights”?
The empowerment we’re researching looks very different to this. What we see is a rapidly evolving market for tools and services that make it easy for individuals to make and implement better decisions, including sharing notes with their peers.
So our view of empowerment is:
- social and peer-to-peer, not individualistic
- about a market for empowering tools and services, not driven by regulation or an understanding of regulation
- based on an understanding of how real human beings behave (for example, wanting things to be simple, convenient and easy) rather than economists’ fantasies about rational decision-making
This is not just an academic question. Whichever side you are on – whether you are a regulator seeking to promote empowering policies, an entrepreneur seeking to innovate empowering tools and services, or an organisation learning how to deal with more empowered consumers – how you define ‘empowerment’ will determine what issues you focus on and what actions you take.
The EU’s Barometer for consumer empowerment is based on an assessment of the following factors:
1. Consumer skills
Basics skills: Recognize cheaper product; Find best interest rate; Calculate the interest on a loan
Capacity to read logos/labels: Correct interpretation of “grams of fat”; Find expiring date for a product; Recognize correctly logos
2. Awareness of consumer legislation
Unfair commercial practices: Rule for illegal advertisement; Rule for gifts received by post; Rule for advertising prices (air tickets)
Cooling off period after purchase: Rule for money back guarantee; Rule for the purchase of car insurance; Rule for door-to-door sales
Guaranteed period: Rule for commercial guarantees
3. Consumer engagement
Comparing products: Comparisons when purchasing a good; Actual behavior in comparing products
Reading terms and conditions: Reading terms and conditions
Interest in consumer information: Knowledge of consumer organizations; Knowledge of programs related to consumer rights; Actual behavior in obtaining info on consumer rights
Tendency to talk: Tendency to communicate negative experiences; Tendency to communicate positive experiences
Detriment and redress: actual behavior when experimenting problems for which there is a legitimate cause for complaint