Knowledge And Decisions

The general benefits of sorting and labeling must be distinguished from the special benefits of qualitative selectivity. A basketball coach can select a taller sample of boys from a given population, but the average height of the whole population is unaffected by whether or not they are sorted and labeled. From a social point of view, what matters most are the benefits of sorting and labeling given things, activities, and people in society as a whole.

There can be a substantial difference in value between a sorted and an unsorted collection containing the same quantities of identical items. If a flood sweeps through a supermarket, washing all labels off the canned goods, the cans will have to be sold at a fraction of their original prices, if not thrown away. No customer will pay anywhere near the full price for an unlabeled can which could turn out to contain vegetables, fish, or coffee. The supermarket will then have to buy more canned goods from wholesalers to restock their shelves, paying large sums of money to replace the unlabeled canned goods with new canned goods with the same identical contents as the old, but more valuable solely because of having been sorted and labeled. In a similar way, there may be a net social gain when people who like a quiet contemplative life sort themselves out from those who enjoy rousing parties and/or motorcycles — even though there are the same numbers of each kind of person after the sorting as there were before. The demand for retirement communities, for apartment developments catering to young singles, and other specialized communities is one indication of gains merely from sorting and labeling a given population.

Among the costs of sorting and labeling is a loss of diversity. That cost differs from person to person, according to tastes and preferences. It also varies incrementally with how much diversity an individual already has. An elderly person who works among younger people and has frequent visits with offspring and grandchildren may prefer the day-to-day tranquility of living among contemporaries, without fear of becoming wholly isolated in an unnaturally homogeneous environment. More generally, the need for diversity is itself not homogeneous, but varies from person to person and varies incrementally with the circumstances of the same person. There is a sorting and labeling of people by the extent to which they wish to be sorted and labeled. The coexistence of both specialized and general communities is one indication of this.

Sorting and labeling, whether of people or of things, is a sorting and labeling of probabilities rather than certainties. We believe, with varying degrees of confidence, that a certain person would like a certain Christmas gift, or would be amused by a certain remark, or be pleased with a certain action. We never really know and the very fact that there are such words in the language as disappointment, regret, etc., is testimony to the pervasiveness and persistence of this feature of the human condition.

ORGANIZATIONS

Despite the elusiveness of certainty, the remarkable success of such things as franchise operations is evidence of the value of merely reducing the range of uncertainty. A “Holiday Inn” is not necessarily better or worse than any other hotel. There are undoubtedly many independent hotels that are better and worse (by whatever standard) than the average Holiday Inn, or even better or worse than any Holiday Inn. Moreover, Holiday Inns vary among themselves. Yet the fact that thousands of hotel owners are willing to pay in various ways for the privilege of using this franchise designation means that the economic value of a given physical structure is greater with a Holiday Inn sign in front of it than without it — and that in turn means that millions of travelers are more likely to stop there for some reason. These travelers are also aware that there are better and worse hotels; all that the sign does is reduce the range of uncertainty as to quality and price. The value of the franchise, and its spread internationally, is evidence that this is no small consideration. The growth and prosperity of many other franchising corporations in various fields suggests that this form of sorting and labeling is of great value to customers, especially in a highly mobile society where individual knowledge of individual establishments is rare or more costly.