One more cognitive dissonance post

Andrew Gelman has a good, skeptical response to some questionable claims from Herbalife, but there's one point where we're in disagreement, not so much as to the conclusion as to the reasoning behind it.

Gelman says:

Amusingly, one of Herbalife’s points is “Fact: Majority of Former Distributors Would Recommend Herbalife to Friends and Family.” But that’s exactly what you’d expect of a still-active pyramid scheme, no? Existing members want new people below them on the pyramid. I’m not saying this means it is a pyramid scheme, but it doesn’t seem like evidence against the hypothesis!

Perhaps I'm misreading this but I'd assume that former distributors no longer have a direct interest in the company. If this is true, does this mean we can take former distributors as impartial judges? Not by a long shot.

This is where we segue back to a recent thread, cognitive dissonance and the psychology of marketing. Companies like Amway and Herbalife are textbook examples of marketing psych (literally for Amway, in two different chapters, no less). And it's important to remember that this relationship goes both ways. While the psychologists writing these texts study these companies, many of the executive in these companies have read these books and taken these classes and they've thought seriously about how best to apply these principles.

[My background in this field is spotty so I would highly recommend that you pick up a copy of Cialdini's Influence (either regular or textbook version) or some other good text on the subject and make sure I'm getting this right... ]

There have been a number of studies that show that when you convince people to believe something based on one reason, they have a tendency to come up with additional reasons to support that belief and that these reasons do not go away just because the original reason is removed. This effect is even stronger when the belief is stated publicly, particularly to friends and family or in writing (Amway training makes a big deal about getting things in writing).

The former Herbalife distributors are another one of those cases where what happened was exactly what the textbooks said would happen: people who had sold a line of products to friends and family in the past now tend to hold the reassuring belief that those products were good. This doesn't prove that they weren't good and it certainly doesn't say anything one way or the other about Herbalife being a pyramid; it simply serves as another reminder that things often happen the way your professor said they would.