The cheapest version of the Dacia Sandero costs just £5995 in the UK if you don’t order any optional extras. It does just about everything a car should. It keeps the rain off, it’s quicker than walking, it’s reasonably reliable and it won’t fold in half if you crash it.
It covers the basics very well. You might need more luggage space, or more seats, or four-wheel drive, but if you don’t there’s really no reason to buy anything else – not even a slightly better-equipped and more expensive Sandero.
If cars were bought on price alone, this country’s road network would be carpeted with entry-level Sanderos. You may have noticed that it isn’t. People buy other cars instead, perhaps because they’ve always bought Fords, or because the dealer they’ve always gone to sells Vauxhalls, or because another company has offered a finance deal they can’t say no to, or maybe because they just prefer them.
The situation becomes more complicated further up the market. Some Audis are made of the same stuff as some Skodas. The Audis cost more, so there’s a strong financial case for choosing the Skodas. Some people buy the Skodas because they don’t see why they should pay more for the Audis, but others buy the Audis because they’d rather be associated with the more premium brand.
At the top end of the scale, you can have a Porsche for £100,000, or a Bentley for £150,000, or a Rolls-Royce for £250,000, or, if business is going really well, a Bugatti for £2 million. These are wonderful cars, no question, and no doubt thoroughly enjoyable to own, but there’s nothing important they do that a Dacia can’t do too.
And yet they survive. Some people buy them, many others wish they could. Part of the reason for this is not just that we want to have personal transport, nor even because we are human beings. It’s because we are animals.
Animals can gain an advantage over other animals of the same species by giving out signals (whether true or not) which help them attract mates and intimidate rivals. For example, a peacock with the best-looking tail in sight has the strongest chance of cosying up to a peahen and passing on his genes through the next generation of peachicks.
Similarly, if you buy a new Rolls-Royce you’re demonstrating you have easy access to the £250,000 or so required for this single purchase, and presumably there’s more where that came from. Even if no one is consciously aware of it, the underlying message is that you have enough resource to look after any future children, and that enemies with less resource should think twice before trying to mess with you.
(Unlike peacocks, of course, human beings may not want to give out this message or be seen by other people in those ways. It’s possible that there are multi-millionaires who never drive anything more expensive than a ten-year old Renault Clio. We’re just not likely to hear about them.)
The price of the car isn’t the whole story, though. As the advertising executive and populariser of behavioural economics Rory Sutherland has pointed out, if price was everything then drivers of articulated lorries would be among the sexiest people on the planet. A new truck unit and trailer cost about as much as a Bentley Continental, but it doesn’t have the same effect for two reasons.
One, the driver probably didn’t buy the lorry. Two, the lorry is incredibly useful. It can transport a large quantity of goods from one part of the country to the other quite quickly. If there were no lorries, the country would collapse.
An item that is both expensive and useful doesn’t give out as impressive a signal as one that is expensive and near-useless (or even actually damaging – it’s a lot easier being a peacock if you have a convenient small tail rather than a clumsy large one). Part of the appeal of a £40,000 watch is that it doesn’t tell the time any better than one you could have bought for £40. The owner didn’t need to spend the extra £39,960, but is so successful that they were able to anyway.
Equally, there is no benefit in driving a Ferrari 488 rather than a Nissan Micra through London. If anything, the Nissan driver will probably have a better time of it. Rationally, we may point out that the 488 cost as much as twenty Micras and is less effective in the city than any of them. Subconsciously, it’s the Ferrari driver we envy, or fear, or want to make babies with, just as they hoped we would.