PDF Summary:Alchemy, by Rory Sutherland

Science and reason create technological marvels, but they’re less successful at shaping human behavior. Since humans are irrational creatures, irrationality can be a useful tool for pushing various agendas big and small. In Alchemy, Rory Sutherland suggests that to solve economic and political problems, we should leverage people’s illogical—and even magical—ways of thinking. If business and political leaders can better understand the human psyche, they can use it to tackle the issues of the modern world.

As vice chairman of the advertising firm Ogilvy & Mather, Sutherland merged commercial advertising with behavioral science to “hack” the human mind. In this guide, we’ll examine what Sutherland believes are the faulty assumptions of standard economics, the peculiar quirks of human perception, and why meaning is more important than fact. We’ll delve into the underlying research on behavioral psychology and discuss the implications of using irrationality to influence the public at large.

(continued)... (Shortform note: While Sutherland may be right that the unconscious is a powerful tool for influencing other people, if you’re the person being influenced, disengaging the unconscious may be in your best interest. In Factfulness, Hans Rosling points out that the innate biases evolution gave us can make us overgeneralize, jump to conclusions, and perpetuate ignorance in the face of new information. Rosling recommends that to overcome these tendencies, you should practice a combination of openness and skepticism—the tools of the rationalist—while insisting on hard facts instead of the forms of persuasion that Sutherland advocates.)

Why Meaning Matters

The key to understanding human perception is to recognize that our minds focus on what objects and events mean to us much more than their physical details. Sutherland writes that this particularly applies to how we value and react to things. The magic in engaging the unconscious mind lies in using the most unlikely, illogical, and sometimes outright silly tactics to alter how people perceive something’s value, and thereby change their behavior. This is where unreason triumphs over logic—by making an object or event seem outlandish, you instinctively draw the mind’s attention to it and trick people into reframing their perception.

(Shortform note: What Sutherland presents as a magic trick for use in marketing and persuasion may actually play a much more fundamental role in holding societies together. In Maps of Meaning, Jordan Peterson argues that for the human mind, pure objectivity is impossible. Like it or not, we filter every sensory perception through the meaning that our mind assigns to it—a meaning that’s often heavily grounded in our cultural awareness. Though Sutherland labels this irrational, Peterson insists that the act of assigning meaning—which he classifies as “myth” on the cultural level—is a crucial neurological process for sorting information and making sense out of chaos. When shared, meaning is the vital glue that allows society to function.)

There are many ways to perform this magic trick, but Sutherland argues that the main ones involve language. Language is what we use to convey meaning—for instance, by drawing attention to specific details of a product, to highlight one aspect of a political candidate over others, or to reframe a negative experience into a positive. Even the most glaringly illogical uses of language and meaning can have an outsized effect on how people perceive the world, and by extension, the experienced reality that our perceptions create, as we’ll see in the next section.

(Shortform note: The power of language to reframe perception is effective even when you’re consciously aware that such tactics are being employed. In Walter Isaacson’s biography of Steve Jobs, he recounts that Jobs, the cofounder of Apple Computers, emitted what his employees dubbed a “reality distortion field.” Through the power of words alone, Jobs was able to convince his workers to meet deadlines, create features, and redesign systems even when they told him that such things were impossible. More often than not, Jobs was proven right—but first he had to alter workers’ perception before reality bent to his will. Though Sutherland suggests changing perceptions instead of reality, Jobs somehow found a way to do both.)

The Uses of Illogic

Sutherland says that in any situation involving human beings, it’s essential to acknowledge and tap into the instinctive, unconscious reasoning behind how people make decisions. Whether you're selling a product, planning a business strategy, or trying to convince people to eat healthier food, the “magic” of unreason can be far more persuasive than logical arguments and facts. Three so-called “irrational” mental processes that we’ll explore include the use of subtle cues to signal trustworthiness, the placebo effect in which the mind can trick the body, and lastly the mind’s tendency to make choices that are “good enough” to achieve a given want, rather than striving for the best possible outcome.

In Signaling We Trust

The first persuasive tool we’ll consider is signaling—the things we do to demonstrate our intent and trustworthiness to others. The human mind uses signals as a shorthand from which to form broader judgments about people, groups, and institutions. By being deliberate about the signals you send, whether or not they seem rational on the surface, you can gain people’s trust and nudge them in favor of whatever message you’re trying to convey, even if they don’t fully understand why they trust you and believe what you say. Sutherland explains the traits that make signals strong and effective, how signals are employed in the business world, and why signaling sometimes incurs short-term costs in the pursuit of long-term gains.

(Shortform note: While the forms of signaling Sutherland discusses are broadly universal, it’s possible to dig deeper into this topic and adjust the type of signals you send depending on the person with whom you’re communicating. In Surrounded by Idiots, communication expert Thomas Erikson identifies several different personality types and how to specifically adapt your behavior to send them the signals they’ll find the most persuasive. For instance, being brusk and direct is effective with ambitious personality types for whom politeness and people-pleasing behavior signal weakness. Erikson says you don’t have to be dishonest—only that you can communicate what you want while adjusting how you express it to suit your audience.)

Whatever it is that you want to signal—that you’re the right candidate for a job, that your toaster design is better than your competitor’s, or that your social media empire doesn’t really want to take over the world—Sutherland says words and logical arguments aren’t enough. A powerful signal that people will notice must:

1. Be costly to the person or institution sending the message
2. Show some degree of creativity in the message’s creation
3. Include some measure of attention-getting nonsense

(Shortform note: While Sutherland backs up these statements with several examples from the advertising world, you should carefully gauge how much creativity and nonsense is appropriate for some situations. For example, consider job applications. Because employers may judge your resume within a matter of seconds, it’s important to make yours stand out from the pack in terms of time spent and creativity, but depending on the job you’re applying for, anything nonsensical or smacking of the wrong kind of creativity—such as bright colors or hard-to-read fonts—might have the opposite effect from what you intend by signaling the wrong kind of message.)

Persuasive Absurdity

Talk is cheap, and people realize this. Sutherland says the cost in money, time, or resources to create a unique message shows a certain level of confidence and commitment that a simple verbal argument cannot convey. Likewise, as discussed before, the human brain is programmed to ignore the ordinary or expected. For a signal to cut through the noise of everyday life, it must contain an element of the unexpected—and nothing stands out so much as the absurd.

(Shortform note: The neurological response that Sutherland describes is governed by the limbic system, which is considered one of the oldest parts of the brain on the evolutionary scale. In Maps of Meaning, Peterson explains how the limbic system is triggered when an unexpected sensory input clashes with your mental model of the world. This initiates your fight-or-flight response, but it also focuses the brain’s attention and curiosity on the new, incongruous information. While this is a basic survival reaction, the limbic system also reacts to humor, engaging the brain’s attention the same way. Communicators in addition to Sutherland have touted the value of hacking the limbic system as a way to get your message across.)

The idea that signals should contain some degree of nonsense is most easily demonstrated in advertising, writes Sutherland. Consider how many advertisements today contain a ridiculous or humorous element that has nothing to do with the product being sold, whereas more ads from decades ago focused on conveying logical reasons why a certain product or service was better. The ridiculous ad accomplishes two things—it grabs your attention in ways a logical ad wouldn’t, and it shows that the business running the ad believes enough in its product or service that it’s willing to spend the money, time, and creative effort to tell you about it in an amusing way.

(Shortform note: In the age of social media, absurdity in advertising can have an added benefit that Sutherland doesn’t mention—namely, that an ad can go viral as people share it with their online connections, boosting the message’s reach with no further effort on the sender’s part. Nevertheless, when using humor, be careful not to cross the line between surprising your audience and offending them. Humor and absurdity have to be measured against the tastes and values of your target audience so that a joke that lands wrong doesn’t tarnish your message.)

Show That You’re Serious

Powerful signals don’t have to be silly, but they have to incur a cost to be believed. Sutherland gives the example of a business that spends extra money providing customer service above and beyond its industry’s standard. This may not make logical sense from the perspective of short-term economic gains, but it does make sense if you assume the goal is to build unconscious trust in your consumers—leading to customer loyalty and increased profits in the future. Consciously or not, people recognize when another person or a business puts aside their short-term, selfish interest. Since humans are a social species, we’re hardwired to notice and believe any signals that demonstrate commitment to the community as a whole.

(Shortform note: The drives behind social behavior may offer clues to more social “hacks” than Sutherland covers. In The Art of Thinking Clearly, Rolf Dobelli lists several mental fallacies that we’re prone to because of our need to fit in. One is the trend to judge a behavior positively if more people are doing it—an irrational urge that’s key to the fashion industry. Our instinctive in-group, out-group bias has been central to the political realm since time immemorial, as is our bias in favor of authority. Where Dobelli and Sutherland’s ideas overlap is in our urge for reciprocity, the idea that if someone does something for us, we’re more likely to answer in kind—such as by rewarding a business’s good service by becoming a repeat customer.)

Placebo Power

Another common phenomenon in which the mind and body behave counter to reason is what’s known as the placebo effect—in which, for example, your body reacts to what you think is a drug, even if it’s just a harmless sugar pill. Though using placebos can seem dishonest to the rational mind (aside from their role in medical testing), Sutherland argues that the placebo effect is a legitimate tool we can use to hack our bodies and minds to achieve various beneficial outcomes—whether that’s improved health or a better mental state. To make this case, we’ll look at how the placebo effect works, the characteristics of effective placebos, and how the placebo effect manifests in areas of life beyond the medical field.

Sutherland suggests an evolutionary explanation for the placebo effect. Our bodies evolved to live in harsher conditions than most of us experience in the modern world. For that reason, it didn’t pay to be sick—the body’s immune response to illness temporarily weakens it, reducing short-term survival in the wild. According to this theory, our immune system only gives its full effort if we perceive that it’s safe to do so. A placebo works by telling our body that it’s safe to go into healing mode, and that doing so will likely be successful instead of leaving us vulnerable to predators.

The Science of Placebos

Research on the placebo effect isn’t settled, as there are other plausible explanations than the one that Sutherland offers. One is simple coincidence—some health conditions naturally fade with or without medication at all. Likewise, taking a placebo you believe will make you healthier may spur you to adopt other healthy behaviors, such as exercise and making better food choices, that can promote a natural recovery. A placebo may lead you to reframe your perception of your symptoms so that they don’t seem as severe. Changing your perceptions can likewise reduce anxiety and release the body’s natural endorphins, all of which contribute to making you feel better.

The opposite of a placebo—when someone is told a drug will cause harm, whether or not that’s the case—is called the nocebo effect, which can produce a measurable reduction in health and negate the positive effects of beneficial medication. In 2021, researchers studying placebos and nocebos discovered that in either case, placebos and nocebos trigger neural activity in the area of the brainstem that regulates pain perception. While that study was aimed at finding ways to treat pain, the wider implication is that the placebo effect is rooted in the deepest part of the unconscious.

In a sense, taking a placebo is a form of self-signaling. Studies show the placebo effect can induce positive outcomes even if a medication isn’t a placebo at all. Sutherland says this happens when a drug’s marketing campaign highlights one specific effect—for instance, that a specific variation of a painkiller is good for fighting headaches. The drug may be chemically identical to other versions on the market—the only difference being the words on the box—and yet, those who take it may actually feel a stronger reduction in headaches than if they’d taken the exact same drug under a different label. Via the placebo effect, you can signal to yourself the outcome you want, and your body will comply.

(Shortform note: Sutherland’s discussion of placebos explains why they may prove effective for physical health, but research has shown that placebos benefit emotional health as well. In Lost Connections, Johann Hari cites studies revealing that fully 50% of the benefit from antidepressant medications can be attributed to the placebo effect. While Sutherland argues that effects such as these prove that placebo signaling coupled with real medication is a net win for the health industry, Hari disagrees, stating that the negative side effects of antidepressants in particular outweigh the potential benefits of the drugs’ supposed healing effects on the mind.)

The Shape of a Placebo

Sutherland writes that as with other signals, a placebo’s effectiveness depends on three factors:

1. How much the placebo costs
2. How rare we believe the placebo is
3. How much effort is entailed in taking it

For example, consider a hypothetical herbal supplement that’s supposed to increase your concentration. If it’s cheap, easy to take, and available at any corner store, it won’t be effective because you won’t believe it. However, Sutherland suggests that if it’s somewhat expensive, can only be found at specialty shops, and has to be taken with food, a hot beverage, or only at specific times of day, we’re much more likely to believe in its power, and its “real” effects are more likely to kick in. Don’t think of this as lying to yourself—think of placebos as a way to hack your mind and body systems that you don’t have conscious control over.

(Shortform note: The reasoning behind Sutherland’s factors for strengthening the power of a placebo may be largely due to social conditioning. For instance, in Western culture, we’ve been taught to associate healing with costly doctor’s appointments with limited availability, tons of paperwork, and hours of waiting. In our minds, this process is linked to the expectation that what ails us will be cured. In The Expectation Effect, David Robson writes that this is both a blessing and a curse. While personal and cultural expectations influence your brain—and through it, your body—they may also have a nocebo effect, such as magnifying health problems as you age if you’ve been conditioned to see your elders as weak and sickly.)

Placebos aren’t limited to drugs you ingest. Sutherland argues that many of our ritualized and irrational behaviors send placebo signals to ourselves and others to produce a desired mental state or outcome. One example is a crosswalk button that doesn’t affect an intersection’s light cycle. The button is a placebo for reducing a pedestrian’s impatience, giving them a sense of control, and reducing the chance of them walking into traffic. Other examples include the objectively strange initiation rituals practiced by some clubs and organizations. The ritual triggers a placebo effect to heighten members’ sense of shared community, and the strangeness of it makes your mind take notice.

(Shortform note: Though Sutherland categorizes ritual behavior as a form of placebo, it may be more deeply tied to the social conditioning that gives some placebos their underlying power. In 21 Lessons for the 21st Century, Yuval Noah Harari writes that rituals form the basic building block of the stories upon which society functions—and from which our brains set expectations. According to Harari, the most powerful rituals involve sacrifice, such as fasting or giving up something you own. These seemingly irrational rituals strongly signal your belonging to a group, and they also meet Sutherland’s criteria for inducing a placebo effect, as discussed before.)

The Good Enough Solution

The third puzzle piece of the mind that you can leverage when trying to influence people is our unconscious preference for safety over perfection. Much of economics relies on the assumption that when faced with a problem, people work toward a “best possible solution,” but the human brain doesn’t operate that way. Instead, the mind seeks out solutions that are likely to work while minimizing the possibility of failure. It’s a subtle distinction best phrased by the truism, “Perfect is the enemy of good.” Sutherland discusses how the unconscious mind veers away from reason to deal with uncertainty, what form this takes in a practical sense, and how the brain’s desire for a “whatever works” solution can be used as a tool for persuasion.

Logical problem-solving works within the confines of well-defined problems where everything comes down to a handful of easily quantifiable variables. In real life, though, every decision involves uncertainty, which makes logical decision-making exponentially more difficult. However, thanks to evolution, our brains cope with uncertainty far better than any mathematical model. Sutherland contends that in decision-making, reducing uncertainty is our unconscious goal. Rational optimization is impossible in a dark and scary world of unknowns, so instead, our brains try to be mostly right while reducing the odds of being catastrophically wrong.

(Shortform note: According to game theory, this approach to problem-solving isn’t as irrational as Sutherland implies. In Thinking in Bets, poker expert Annie Duke explains that since life is full of uncertainty—and therefore a significant amount of random chance—most decisions you make aren’t either right or wrong, but exist on a spectrum from poor to pretty good. Even in conscious decision-making, Duke argues that measuring and reducing uncertainty should be one of your principal goals so that you can increase your odds of success.)

A World of Trade-Offs

One common way we protect ourselves from a world of uncertainty is to reframe a problem so that instead of asking the obvious question—such as, “What’s the most efficient way to grow as much food as possible?”—we ask an alternate question that’s easier to answer, such as “What’s the safest way to grow something so that I won’t starve in case of a disaster?” Most of the time, we’re not consciously aware of the alternate questions that guide our decisions; therefore, Sutherland writes, these unconscious questions make many of our conscious decisions seem irrational. However, if you identify people’s unconscious needs, you can address them directly in ways that you’ll find are much more persuasive than dry, analytical logic.

(Shortform note: Behavioral psychologist Daniel Kahneman identified the unconscious substitution of easy questions for hard ones as an automatic process the brain uses to conserve energy and speed up decision-making. In Thinking, Fast and Slow, Kahneman writes that automatic processes such as these operate so quickly that we’re not even aware of them. Our brains learn these mental tricks through a lifetime of experience, but because they rely on generalizations and approximations, our automatic thoughts are prone to error. Unfortunately, Kahneman says that the conscious mind accepts unconscious judgments at face value, a weakness that Sutherland suggests can be exploited.)

People expect life to be messy and that every decision will involve a trade-off. Sutherland says that to win people’s minds, you should play into that expectation, even if “reason” suggests otherwise. If you’re selling a product or an idea that’s objectively better than the alternatives, present it as a trade-off anyway. We’re wired to believe that everything has a downside, so build a narrative as to why that’s the case, even if doing so involves some distortion. If you admit to imperfection while minimizing people’s feelings of uncertainty, you’ll be speaking to the unconscious mind’s happy place. According to Sutherland, that’s the magic to making sales, winning votes, and changing behaviors.

(Shortform note: Sutherland’s advice to acknowledge a downside, even at times when none exists, goes against the grain of all the literature in praise of positive thinking, but to the unconscious mind, positivity isn’t the default setting. In The Happiness Trap, Russ Harris explains that since the brain evolved for survival, we’re primed to watch for threats and plan for the worst. Although these adaptations have outlived their usefulness, if you try to suppress them, you’re going to have a bad time. Acknowledging and accepting the negatives in life can be a healthier approach than denying them, and to Sutherland’s point, it’s also more honest.)

How to Do Magic

Understanding Sutherland’s concepts is different from putting them into practice. The pressure of traditional economics is strong, and to find creative solutions outside it, you have to be willing to experiment with approaches that may seem silly. In this section, we’ll show how some of Sutherland’s ideas might be applied in two fictional scenarios—one in which a business owner is trying to move unsold merchandise, and another in which a local politician is trying to revitalize his town. Their solutions include questioning assumptions, changing perceptions, addressing people’s unconscious motivations, and bringing different ideas together in absurd combinations.

Scenario 1: Blind Date With a Beer

In our first example, Kate is the owner of a local pub. As a beer aficionado, she’s built up a stock of specialty imports from around the world, but unfortunately they haven’t proved as popular as she’d like, and most of her specialty beers sit unsold while her customers buy the more familiar brands over and over. Kate’s empirical data says that her customers aren’t interested in imported beers, despite various displays in her pub that logically explain the merits of each brew. Should Kate do the economically prudent thing, dump her unsold stock, and write it off as a loss? Or, as Sutherland might have her try first, can she perform a magic trick to make her customers change their drinking habits?

Kate starts by following Sutherland’s advice and questioning the assumptions her business is based on. Why do people order beer in her pub? Is it because they enjoy specific brands and her bar is the best place to get them? Of course not. If all they wanted to do was drink, it would be cheaper to buy what they want from the local liquor store and drink it at home. Kate realized that her customers’ real motivation for coming to her pub was to socialize and have fun, and that for the most part, which beer they ordered was tangential to that goal. Therefore, to make her imported beers sell, she had to tie them to her customers’ sense of fun and socialization.

Kate announced a new event: “Blind Date With a Beer.” She’d assemble random six-packs of bottles, mask the labels so each one was a mystery, and sell them only to groups of three or more. To make it feel special, she limited the event to only one night a week—signaling scarcity to increase its value. It would be irrational for customers to spend money without knowing what they’d get, but disguising the bottles tapped into the playful fun associated with low-stakes risk and surprise, like a game. By restricting the sales to groups, Kate tapped into the underlying socialization motive that brought people to her pub. After a while, the new event caught on, and Kate’s stock of imported beers found a new clientele.

Blind Shopping in Practice

While blind beer tastings have existed for a while, especially as social events to host at home, the example given here is actually based on the popular “Blind Date With a Book” program hosted by many public libraries during February in association with Valentine’s Day. Librarians will gift-wrap books with nothing to mark them but genre labels such as “mystery” or “romance.” This program has proven effective as a way to get readers to try out new authors and to find audiences for overlooked titles. Since library books check out for free, the program is low-risk and high-reward for patrons, and librarians engage the community by asking their regulars which titles they ought to send on “blind dates” with other readers.

Once money becomes involved, shopping sight-unseen becomes more risky and irrational, yet risk may be part of the appeal. A lost luggage store in Scottsboro, Alabama lets shoppers purchase “mystery bags” of products that are only vaguely labeled. Shoppers are also drawn to “bin stores” that resell returned items at discounted rates. While the items aren’t masked like the beers in our example, customers flock to these stores without knowing what they’ll find. While a purely rational shopper might look online for the exact products they want, the draw of mystery boxes and bin stores is the psychological thrill of discovery, rooted in the brain’s hardwiring to hunt for and bring home a prize.

Scenario 2: Save Our Town, Save Our Team

In our second example, Marcus is a newly elected small-town councilman who promised to revitalize the town’s historic but crumbling business district. Many of the buildings on Main Street are abandoned, and the town can’t afford to buy and restore the unused properties. Several long-time businesses remain, including a furniture store and a restaurant, but stiff competition from a new shopping center on the edge of the city is wearing them down. After a string of new tax incentives fails to attract businesses back to Main Street, Marcus is at his wits’ end. Simple economics says that Main Street is doomed—but according to Sutherland, a little psychological alchemy might turn economic lead into gold.

Marcus finds two psychological keys to work with—the town’s pride in its high school football team and the Main Street restaurant that’s still in business. The two are unrelated except that both are closely tied to the town’s sense of identity, especially for those who’ve lived there their whole lives. Marcus plans to build an emotional link between the survival of Main Street and the football team’s success, no matter how irrational or absurd that concept is. He paints a bleak picture of the kind that Sutherland says we’re primed to believe, but if he can get the town’s residents to associate shopping on Main Street with supporting the football team, it might breathe economic life into the district.

He starts by inviting the football team to the restaurant for a pre-game dinner at the start of the football season, which he then makes into a regular event that more and more people attend to show support. At these dinners, Marcus talks about his memories of Main Street and wonders aloud how the town—and by extension the football team—will survive if the historic district dwindles. Since the town no longer depends on its historic district financially, there’s no logical reason why one should affect the other, but Sutherland would point out that that doesn’t matter. Several residents take the message to heart and form a committee to reinvest in Main Street. By tugging at heartstrings, Marcus turns the tide against cold economics.

“Identity First” Economics and Behavior

Despite what Sutherland describes as policymakers’ and business leaders’ overreliance on traditional economics, people in politics and marketing have long known that emotions around personal and group identity are a powerful tool to shape behavior, as discussed by motivation expert Tony Robbins in Awake the Giant Within. Though identity-based politics is often derided for the way it negates rational discourse, identity as a group motivator has had its success stories too.

One example is the “Don’t Mess With Texas” anti-littering campaign. Instead of reasoning that littering is bad, the simple slogan implies that littering is an attack against Texas, and that Texans—who pride themselves on strength and resilience—are uniquely qualified to fight back. Brushing aside the logical assumption that most people who litter in Texas are Texans, the campaign leverages Texans’ self-identification as people prepared to defend themselves to create a measurable reduction in littering—over 60% between 2013 and 2023 alone. It’s the kind of psychological solution that Sutherland says can be far more cost-effective than an engineered solution, such as building more landfills and picking up more trash.

Though many small towns struggle with slow decay, the fictional example used in this guide was inspired by the story of Denham Springs, Louisiana, whose historic business district was crumbling in the 1970s but had been thoroughly revitalized by the ’90s as a shopping bazaar for antiques. Unlike in our fictional example, the shift in Denham Springs’s historic district’s identity was unconscious, not deliberate at first. However, to illustrate Sutherland’s argument, anything that the unconscious can accomplish, a conscious-minded leader can take advantage of, if willing to look beyond the confines of traditional economics and logic.