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The Beauty of Consumer Reviews

Tags Calculation and Knowledge


One problem that consumers must consistently face is the problem of gaining reliable knowledge about products and services they may wish to buy. After all, knowledge in society is diffuse, and it's hard to know which information is reliable. Is product X a quality product or not? And who can be trusted to give us reliable information on the matter. Free exchange, however, often makes it possible for people to benefit from knowledge they don’t personally possess. What's more, many consumers in the marketplace offer this information freely to other consumers.

For much of my adult life, I worked as a salesman. While it is true that there are successful and unsuccessful, moral and immoral, salespeople, the proper function of a salesperson is to convey information to the customer. It is a service. Among the products I sold during my retail years were computers, and the value I offered customers was my knowledge of the products. They had a problem in need of a solution, and if I did my job well, I recommended a product that would solve it, and (crucially) I explained why my recommendation fit their unique needs. In short, when a salesman does his job well, the customers benefits from knowledge they don’t personally have. This problem is partially solved, in a free market, through competent salespeople.

But in a society that can often be hostile toward anything market-oriented, salespeople are often depicted as adversaries to the customers. They may be sharing knowledge, but because their incentive is to sell certain products, the knowledge they share is suspect. Although I personally adhere to the philosophy, as espoused beautifully by the late Zig Zigler, that an honest salesman who sincerely tries to solve the problems of his customers will be consequently more successful in the long run (customer trust is critical when transactions are voluntary), it is certainly still true that the incentives of the salesperson are not always in sync with the goals of the customer. Salespeople may mislead or outright misinform a customer in order to make a quick buck. Good salesmen may help solve our knowledge problem in this case, but this does not mean bad salesmen don’t exist.

Thus, critical reviews were invented. Publications started to employ experts to test and review products, give pros and cons, and convey knowledge of the product to the non-expert. Unlike the salesperson, the experts did not have any conflicting incentives at play. They were paid to review various products from different companies, and their employer’s reputation (a magazine or a website, perhaps) depended on honesty. True, companies could (and have) paid people to give generous product reviews, but a publication or reviewer that earns a reputation for giving paid endorsements will quickly lose its audience. This logic is no different than what guides private certification companies who maintain a vested interest in objectivity. Dishonesty is difficult to monetize for very long.

Unfortunately, critics have their own agendas and preferences. They may have knowledge they can share with the consumer, but unlike the salesperson, they have no way of tailoring that knowledge to an individual customer’s unique problems and preferences. Even worse, critics who review a panoply of different items are often unable to experience the product as the solution to a problem. Instead, the best they can offer is a well-written overview of technical matters and general impressions.

As a personal example (and perhaps it is worth mentioning here that this is not a paid endorsement), I recently purchased Bose Sleepbuds to block out the distracting noises that impede my sleep. Given the high price of Bose products, I did my due diligence before purchasing them and read critic reviews. The author of one eloquently written article complained that it was difficult to sleep with something in her ears, but she never actually claimed to have had difficulty sleeping due to ambient noises, which was my reason for looking into the product. Her review shared both her expertise and experience, but it failed to connect the function of the product to the problem of its target consumer. Critical reviews may be a way to share knowledge without bias, but by the nature of the reviewer’s individuality, expert reviews have a difficult time contending with the widely disparate preferences and unique problems of their readers.

The gap between critic and consumer is most prominent in reviews of highly subjective, less technical products, such as movies, books, and video games. To an increasing degree, the movie-review website Rotten Tomatoes has shown gaps between critic and audience reviews (one of my favorite movies, The Boondock Saints, has a 68-point gap between critics and audience!).


Just as with any other product, people want to know whether they are likely to find a movie worth their time and money before seeing it, but the so-called expertise of critics seems to be among the worst metrics for determining this.

As Rotten Tomatoes and nearly an infinitude of other websites demonstrate, though, critics and salespeople are no longer the only source of product information that the customer can resort to when trying to make an informed consumer decision. User reviews have become so ubiquitous that it is difficult to remember a time without them (other than the subscription-based Consumer Reports). By averaging the scores from all of the reviewers, consumers are no longer dependent on the often questionable expertise of individual critics who are influenced by their own personal preferences, or the competing incentives of salespeople who are under pressure to make sales, irrespective of customer need.

The problem of gaining specific and correct knowledge persists, of course, but consumer reviews contribute to its solution. The knowledge people are spreading is that of their own personal experience with the product, having bought it for an actual need, rather than merely for review purposes. The more reviews there are, the more likely it is that our own experience will match to a highly rated product. Often, the explanations people give for their reviews contain the very information I need in regards to the specific functions I’m looking for (especially when purchasing books), rather than the “expert” overview of technical points.

Most importantly, consumer reviews have not made salespeople or expert reviews obsolete. Instead, they have served as a complement to what already existed. When making a purchasing decision, customers now have three easily accessible, low cost avenues for information, and each one can overcome the limitations of another. Consumer reviews thus demonstrate one of the important ways that people can benefit from the sharing of diffuse knowledge in a market economy.


Chris Calton

Chris Calton is an economic historian and a former Mises Research Fellow. He was the writer and host of the Historical Controversies podcast.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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