3BI: Over-Optimization, Safety Double Standards, and Spicy Food
Welcome to my 3BI newsletter, where I share three insights from the world of behavioral science on psychology, decision-making, and behavioral change.
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Hi everyone—welcome back! I took a little summer break from the newsletter to refresh and take care of other things, but am excited to be back. Let’s dive back in:
Over-Optimizing the Customer Experience
By most business standards, Starbucks’ mobile app is a huge success. It boosted revenue per customer through personalization and loyalty programs, increased in-store order volume, generated valuable consumer data, and created over $1 billion in free working capital from pre-loaded balances.
However, none of that translated into a stronger business over the long term. From 2022-2024, Starbucks saw declines in store traffic and sales, leading to significant drops in its stock value.
According to founder Howard Schultz, a big part of the problem was that the app was too successful. On the Acquired podcast, he explained:
…it was beginning to deteriorate at a rapid rate, the third place experience in the sense of community. Then it overflowed to the point where it disproportionately created an environment in our stores where the mobile app became the primary vehicle as well as the primary vehicle for dissatisfaction, because people couldn't get their drink on time, people were confused whether that was their drink. A lot of anxiety.
The thing I remember the most is that we were in Chicago at 8:00 AM because people wanted to show me the problem. Everyone is getting off the Loop, the train at 8:00 AM, and everyone who ordered on their app says the same thing, your drink's going to be ready in seven minutes. Everyone shows up, and all of a sudden we got a mosh pit, and that's not Starbucks.
In Schultz’s view, overreliance on the app shifted Starbucks’ core value proposition. From Trung Phan:
Schultz originally built Starbucks as a "Third Place" for people in a community to hang out, in addition to the workplace or home. The brand was able to justify a premium price by offering a decent product and upscale interiors. However, the increasing digitalization of the business is slowly eroding the soul of the brand. Meanwhile, there are now thousands of mom and pop cafes gaining market share from Starbucks by successfully capturing its old "Third Place" vibe.
This is a classic case of over-optimization. When financial metrics and digital efficiency take precedence, the less measurable human aspects of an experience get lost. With the rise of AI, this tension will only grow, but opportunities to differentiate by leaning into the human side will, as well .
The Double Standard of Physical and Mental Safety
An interesting observation from Samuel James:
Self-driving cars are an interesting contrast, because we're going to extreme lengths to ensure this is all safe before we let a human being use it, especially at scale.
Millions of miles, edge cases covered galore, and regulation controlling it. This seems to be because physical safety is something we care so much about. In contrast, we're letting all these Al models loose on the world with almost no understanding of how they'll behave or what they'll do to our privacy or mental health. In short, we'd never let a car drive you off a cliff, but we're OK with a state of affairs where an Al tells you to drive off a cliff.
Psychologist Jonathan Haidt has made a similar argument for parenting in the digital age:
We have overprotected children in the real world but underprotected them in the virtual world.
Why do we treat physical and mental safety so differently? I can think of some possible:
Measurement: Mental health is much harder to measure consistently than physical safety (and may never be fully quantifiable). This makes diagnosing problems and proving solutions more difficult.
Novelty: For most of human existence, survival consumed nearly all our attention. Mental health is a relatively new area of study, as we’ve only recently had the bandwidth and resources to focus on it at scale.
Visibility: Physical harm is immediate and obvious, while mental harm is subtle, slower to develop, and cumulative. A car crash happens instantly. Anxiety or depression from digital overload may build silently over years.
Perception: We tend to believe we can control our own minds more than we can. The lingering stigma around mental health reflects a resistance to acknowledging it as a real vulnerability.
The Neuroscience of Spicy Food
The Atlantic recently ran a fascinating story on the explosive growth of spicy food in America:
According to an analysis provided to me by Datassential, a food-and-beverage-industry consultancy, more than half of American consumers are likely to buy an item described as spicy, up from 39 percent in 2015. Those who already like spice are eating even more extreme versions of it, but the interest in heat is happening across the board, even at the moderate level, among people who might never touch a Carolina Reaper. As of this year, more than 19 out of every 20 restaurants in the United States—a category that, notably, includes ice-cream stores, bakeries, and coffee shops—offer at least one spicy item, according to Datassential. Frito-Lay now sells 26 different Flamin’ Hot products, and sales of those products increased by 31 percent from 2022 to 2023.
As a longtime spice enthusiast, this is great news to me. It’s striking, though, because like most Americans, I didn’t grow up with much spicy food.
To put it generally and reductively, American food has not always been known for embracing spice. But now a large and apparently growing number of people in this country are willingly chomping down on fruits that have been expressly cultivated to bind to their body’s pain receptors and unleash fury with every bite. “It’s one of the great puzzles of culinary history,” Paul Rozin, a retired psychologist who spent much of his career studying spice, told me. “It is remarkable that something that tastes so bad is so popular.
I’d disagree with the “tastes so bad” part, but it is fascinating that we keep seeking out food that causes discomfort. One explanation lies in the brain:
Part of this is pure neurochemistry: Capsaicin, the compound that makes many spicy foods spicy, transmits pain signals to the brain, which the brain then counteracts by releasing endorphins—it’s like a runner’s high, except you can get it while sitting in your car outside of a McDonald’s. Rozin calls the phenomenon “benign masochism”: a little bit of pain, as a treat. “It’s bungee jumping and roller coasters and swimming in cold water,” he said, and it is a uniquely human impulse. (Imagine what would happen if you put a dog on a roller coaster.) “We somehow get a pleasure out of our body telling us not to do something, but we know it’s okay.” In the 1970s, when he was studying spice in Oaxaca, Rozin found that even children had learned to tolerate spice. When he offered the local pigs and dogs a choice, they picked bland food every time.
While I do think that spicy food tends to have more interesting and complex flavors, there is something very human to the idea of making something routine a little bit more challenging and exciting.
Read more at The Atlantic.