A sideways look at economics

The word Fathom ([n] a measure of depth; [v] to measure, to understand) conveys a lot of ideas that capture important aspects of our brand. Hundreds if not thousands of possible names were floated among the founding partners of the company and most were rejected in less than a second. The names ran out. None of them worked. (Or if they did, they had already been taken.) In the end, a paid third party was required to propose a name and to make a case for it to get agreement to nail the company’s colours to that mast.

A similar process took place in the Britton household when we were naming each of our children. We bought books with hundreds of names and rejected all of them as unworkable. Finding the right name involved a third party, in both cases. In the case of our daughter, the third party was our cat, whose name at that time was Lucy: later, the cat formerly known as Lucy. (I know, it’s cruel, but on the other hand it’s only a cat.)

The cat formerly known as Lucy                                                                       Lucy

In the case of our son, we dithered for ages and then my sister said: “You should call him Sam.” The moment she said it, it seemed so obviously correct.

There’s the famous scene in Friends where Rachel names her daughter Emma, ‘stealing’ the name from Monica and Chandler who had planned to use it themselves.

The rational, homo-economicus part of my mind rebels at the idea that names can matter so much: it’s who I am rather than what I’m called that matters, surely? It’s the same with the company: it’s the substance, not the form that matters in the end, isn’t it? A rose by any other name would smell as sweet, right? Well, no: not in Romeo and Juliet and not in the real world either.

The economic theory behind the assertion that names don’t matter is known as the ‘classical dichotomy’: the distinction between the ‘real’ and the ‘nominal’ sides of the economy. In classical economics, real things like the number of people working, the quantity of fixed capital, the volume of goods and the quantity of services we produce (the substance), cannot be affected by nominal things like the price level, the value of the currency, the stock of money in circulation (the form), though effects can run in the other direction, from real to nominal, from substance to form.

For example, if I were to arrive at Fathom Towers one morning to find the office looted and empty, then our provision of services to our clients would fall temporarily, and the company’s revenues would also fall. That would mean lower remuneration for Fathom staff all round — in other words, a nominal concept (how much we’re paid) would be affected by a real concept (the absence of fixed capital in the office). Similar effects can be writ large across the economy as a whole. But the reverse causation, in classical economics, does not apply. For example, if every firm were to increase its prices simultaneously by 10% then, the classical textbook would argue, all wages would increase by 10% as well, the value of the currency would fall by 10%, all asset prices expressed in that currency would rise by 10%, and so on — and all of that would happen instantaneously, leaving real concepts (the real wage, the real exchange rate and so on) unchanged.

That pure strand of classical economics collapses the moment it’s exposed to the world. Neither prices nor wages change instantaneously — even in Fathom, that would be impossible to achieve. There are nominal ‘rigidities’ that can cause the real and nominal sides of the economy to interact in interesting ways. One school of thought argues these interactions can only persist in the short term: that in the long term, prices and all nominal quantities will clear, leaving real quantities at their fundamental levels. Another school argues that some of these rigidities can persist into the long term — that the classical dichotomy doesn’t hold at any horizon.

All that is well known. But there’s another strand of thought from outside the field of economics (to date[1]) that echoes this discussion, known as ‘nominative determinism’. The idea here — originally a joke — is that names can affect outcomes. The fact that we spend so long thinking about names suggests that there’s something in this, no matter what homo-economicus would say. It’s probable that there are nominal rigidities in this sense too: ways in which our behaviour conforms to our name. We’re drawn to do things that somehow resonate with our name.

There are lots of anecdotal examples that appear to support nominative determinism: the optometrist who lives in Seymour Close; the meteorologist named A. Freeze; the ornithologist Mark Avery; the (apocryphal, courtesy of Sandi Toksvig) purveyor of lifejackets named Will Drown; the cricket batsman Marcus Trescothick whose surname is an anagram of “cricket shot”; the church warden named Carol Service; the Chelsea goalkeeper named Kepa; the central bank governor named Trichet (rhyming with the French verb tricher, to cheat); the US presidential candidate who Trumped his opponents; and so on. Sometimes there are deep truths in names: Claudio Gentile was a footballer who played for Juventus and Italy, an exceptionally brutal and effective defender, with a beautiful and somehow very apposite kind of irony attached to his name, which means ‘gentle’. His character had both brutality and irony in it — the name was perfect.

But my favourite is astrology. I was born under the sign of Aquarius. I believe it to be vanishingly unlikely that the alignment of the stars with respect to the earth at the time of my birth has any role whatever in influencing my character. However, I can easily see how the description of a set of behavioural characteristics that are notionally associated with Aquarians could exert a kind of gravitational pull on my actual behaviour. I’m aware that Aquarians are supposedly thoughtful, inventive, slightly other-worldly, slightly cold and distant at times, though fundamentally kind. I’ve probably thought about that set of characteristics more than I have about those notionally attached to the other signs of the zodiac, because I “am” an Aquarius. And I find that set of characteristics to be reasonably attractive — almost, something to aspire to. It’s likely that I would find other signs equally attractive if I spent the same (albeit small) amount of time thinking about them, but I don’t. I don’t because that’s not my zodiac ‘name’.

I expect this is true for many people, which accounts for the slight degree of conformity that I’ve observed between people’s behaviour and the characteristics attributed to their star signs.

More controversially, similar effects might be in play when it comes to nationality: we learn of a set of supposed national characteristics, which we spend time thinking about because we were born with that nationality (with that ‘name’), and as a result of thinking about those characteristics and being subjected to cultural influences that tend to describe them positively (not as a result of the accident of our birth) our behaviour converges in some degree towards those characteristics. Gender identities might also have some similar features.

In all of these cases, the name has power which is amplified by the fact that it is ‘given’ to us by a third party. I didn’t choose to be called Erik Britton, British, male, Aquarius. These names were given to me at birth. (I could of course choose to change any of them, except for my star sign, but that’s not the point here.) And, just as with naming our children or the company, we’re much more likely to accept a name and internalise its associations if the name comes from a third party — it’s a kind of ‘framing’.

This is all anecdote and, famously, the plural of anecdote is not data. But the time and energy we spend thinking about names strongly suggests that the classical dichotomy breaks down when it comes to our individual behaviour, just as it does in aggregate across the macroeconomy. Names matter — especially given names.

I think this is also true for Fathom. The resonances that the word Fathom hopefully sets up in the minds of our clients, also reverberate for Fathom staff — and that’s kind of the point. When we’re wondering how to approach a project, or communicate with a client, something somewhere in our minds says: remember — Fathom. So: thoughtfully, with depth and care and taking measurement seriously. It’s in the name, and the name is like a lodestone towards which our behaviour gradually, incrementally converges. That’s the idea, anyway. For brands to work, I gather, they have to be ‘true’, in the sense that the feelings and associations they generate in prospective and actual clients have to be borne out in the products and services provided by that brand. Nominative determinism can help, provided you choose or are given the right name.

“They call me “Hell”
They call me “Stacey”
They call me “her”
They call me “Jane”
That’s not my name
That’s not my name
That’s not my name
That’s not my name.”

The Ting Tings

 

[1] Although there are some early empirics provided, amusingly as always, by the Freakonomics podcast.