Barry Nalebuff defends his company's tea-sweetening policies as those of an honest agent making tea in accordance with what the rational utility-maximizing choices of its principals (the tea-drinkers) would be if its pricipals thought hard about the tradeoff of sweetness of taste versus inches on the wasteline:
Marginal Revolution: HonestTea: Barry Nalebuff responds : In May an MR reader alleged that the graph on Barry Nalebuff's tea (NB: Nalebuff is both an economist and entrepreneur) involved an elementary economics mistake. Nalebuff asked if I would publish his response:
I'm afraid Randy Goldstein would have trouble in our freshman economics course at Yale where the Honest Tea label has become an assignment problem. It is true that we at Honest Tea don't put in sugar to maximize taste even by our own standards. That's because the peak of the taste profile is flat -- like most maxima. Cutting back the sugar costs you very little in flavor but still save you a whole lot of calories. In technical terms, it is a second-order loss of flavor but a first-order savings in calories. We like to think that we maximize the flavor-calorie tradeoff, which is not the same thing as maximizing flavor ignoring calories. To say this one more time. Each additional teaspoon of sugar adds 17 calories. But each additional teaspoon of sugar has a declining additional benefit in terms of taste. We stop before the incremental value is zero (the maximum) and only add sugar where its value is worth the 17 calories.
See what you think: try Honest Tea for yourself: learn more at http://www.honesttea.com.
I think that there is much more going on here than rational utility maximization over characteristics of sweet taste and calories. Here is what it says on the Honest Tea label:
Around the world Chai (chi) means tea. In Kashmir, people have mixed spices into their chai for generations. Our recipe features cardamom, a memer of the ginger family which grows wild in tropical forests. We brew our tea in spring water and add just a hint of sugar cane juice. The result is a spicy, aromatic flavor and a sixth of the carlories of the super-sweet tea-flavored drinks.
Barry and Seth think that it is important to tell potential drinkers that Honest Tea contains "sugar cane juice," that one of their spices--cardamom--"grows wild in tropical forests," and that their recipe is derived from one that has been made in Kashmir "for generations." They somehow miss saying that tea has been grown in India for less than two centuries, that the cardamom that goes into Honest Tea has not been gathered wild from the forest, and that "sugar cane juice" is just a way of saying "sugar" that gets the S-word into the position of being a secondary adjective rather than a noun.
The tea is excellent. And the limeade was the only high-yuppie product we could find in the Kings Canyon general store, and was excellent as well.
Nevertheless: "Robin! To the CulturalStudiesMobile!"