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Are consumers smarter in the Midwest?

Country bumpkins or wise, earthy sages? Naive or ruled by common sense? Easy pickings or slim pickings for con artists?

As I drove from coast to coast last month, I had a chance to do something that many reporters for national media companies can't do -- spend time between the coasts, in the heartland of America. Being a connoisseur of cons, and being intensely curious about the vulnerability of consumers, I got to wondering: Are people in the simple middle of the country more or less likely to fall for scams and hidden fees than people on the sophisticated coasts? Are folks in North Dakota, Montana and Minnesota protected by good old-fashioned horse sense or overwhelmed by slick fast-talkers from big city banks and cell phone companies?

There's nothing like an incredibly subjective story to stir the pot. You probably won't be surprised to hear that the vast majority of folks I spoke with between Pennsylvania and Montana laughed at the notion that they had targets on their backs, or on their wallets. The idea that they're naive simpletons is a media creation, they said uniformly.

Jeanne Erickson registered that sentiment on behalf of all North Dakotans.

"Just because we have the movie "Fargo" doesn't mean we really act like that," said Erickson, who works at the North Dakota State University library in Fargo.

Matt Tomcik, from Indianapolis, offered the same defense for his part of the country.

"People from the Midwest are more perceptive than people on TV and people on the coasts want you to think," he said.  "I think we pick up on things and are more sophisticated than they give us credit for."

There is something unmistakably different about people in the middle of the country, however. They aren't as anxious. They aren't as paranoid. And, according to North Dakota State University communications professor Paul Nelson, they are far more trusting. As someone who has studied in both Harvard and Columbia, Nelson has a good frame of reference.  Yes, he told me, folks in the middle of the country are more vulnerable to big company tricks and traps because they are more trusting.

Jeff Olsen, a Minneapolis-based reporter who covers consumer issued for the NBC affiliate KARE, added a more subtle flair to his observation.

"I think people here are slow to get caught up in things. They take their time when signing up for things, they are deliberate," he said.  "But once they are, they are sometimes too polite to complain. They aren't as confrontational as people from the East Coast."  In other words, they aren't as easily fooled by flashy advertising as folks on the coasts, they don't need every latest gadget and they maintain a healthy sense of skepticism.  But because of their inherent belief in the goodness in others -- and their predisposition to decorum -- they are a bit slower to discover that they're being mistreated.

Laura Rizzo, a co-worker of Erickson's in the North Dakota State library, is originally from Wisconsin.  She agreed that people where she grew up are more trusting, but wasn't about to say that makes them naive.  Just because her folks aren't suspicious of everyone doesn't mean they are foolish, she said.

Laura Rizzo
Laura Rizzo

"I feel like we are aware and observant but take more of a hands-off approach,” she said. “We're not automatically critical or looking for ways to dig in. I don't think we're taken advantage of more, but I do believe we are more trusting."

What about the other side of the question? Are Midwesterners actually smarter than their coastal counterparts?  I never did find a humble Midwesterner willing to brag that folks in their state are smarter than New Yorkers, though the question did elicit more than a few knowing smiles.

So without that subjective measure available, I decided to try even more subjective methodology: research and statistics.  Are there any databases which might suggest that folks in the middle of the country are smarter consumers?


Credit bureau Trans Union offered one glimpse at the answer to this question last month when it released some state-by-state data on credit card debt. The three states with the lowest average credit card debt are, in order, Iowa ($3,872), North Dakota ($4,144) and South Dakota ($4,218). The lowest delinquency rates are in the Dakotas, also.

"That does stand out," said Bill Hardekopf, who runs credit card advice Web site "Everybody thinks the middle of the country might be not as smart, but maybe they know what they are doing."

The credit card data don't hold up as a tool for indicting the coasts, however. The highest average debt was held by consumers in Alaska, Tennessee and Alabama. Debt level isn't exactly a great signal of predation anyway: It could simply mean that consumers in those states enjoy higher credit limits, or higher incomes.

Delinquencies might be a slightly better indicator, and here we have perhaps a glimpse of confirmation for our hypothesis. Last quarter, Trans Union said, credit card delinquencies were highest in Nevada, Arizona and Florida. If we presume that Arizona and Nevada are full of coastal transplants, perhaps we're on to something.  Meanwhile, both North and South Dakota were atop the lowest delinquency rate list. And topping the list of steepest decreases in credit card debt were Kansas, New Mexico and Vermont.

A look at foreclosure data also yields interesting results. Nevada, Colorado, and California held the top spots for foreclosures per household in March, according to RealtyTrac. The Dakotas (again!), Maine, Wyoming and Vermont ranked at the bottom. In fact, the big states are really a tremendous drag on the statistics: California, Florida, Texas, Michigan and Ohio represented 50 percent of all foreclosures in the nation in March.

Folks in the Dakotas don't like to brag. But they were quick to point out that while states like New Jersey, New York and California are in full-blown budget crisis mode, North Dakota enjoys a large budget surplus. Neighboring Montana also enjoys a surplus (though it is much smaller.) That's just another sign of a thrifty culture, they'll tell you.

But those comparisons, while also telling, aren't quite fair either. North Dakota's ranks of retired teachers and police officers earning full pensions wouldn't add up to the pension costs in Clifton, N.J., let alone the entire state's multi-billion-dollar liabilities.

But I was able to dig into an old bag of tricks -- I mean original research -- in my quest to quantify the horse sense effect. A few years ago, I worked on a "sneaky fee" study with researcher Larry Ponemon of the Ponemon Institute in an attempt to learn how much U.S. consumers lose to unfair fees every year. The research was published as part of my book, "Gotcha Capitalism." We asked a nationwide representative sample of Americans to tell us how much they overpaid for everyday items like cell phones, credit cards, ATM fees, hotels, airlines, pay TV, Internet and so on. The answer: just shy of $1,000 every year apiece.

At my request, Ponemon compiled a new cross tabulation of the research this week, breaking the subjects into the smallest regions he could while maintaining the integrity of the data: Northeast, Mid-Atlantic, Midwest, Southeast, Southwest, and Pacific.  His conclusion?

Consumers in the Midwest pay less in sneaky fees ($857 per year) than those in any other region in the country -- nearly 20 percent less than those in those in the Northeast ($1,035), for example, or the mid-Atlantic ($983).

The difference was most dramatic in cell phones, credit cards and pay TV. For each product, Midwesterners reported that they were screwed out of 15 to 20 percent less than their Eastern counterparts.

The survey results are of course imperfect. We asked consumers to self-report fees that were designed to be sneaky. It's certainly possible that Midwesterners missed more fees than New Yorkers or Bostonians.

But it's hard to look at all this data and conclude that folks in between the coasts are foolish, goofy or easy prey.

Mike Robinson, who has lived in both Long Island and in North Dakota, thinks he has a pretty good grasp on the issue.

"I think that Easterners or West Coast people think that there's some kind of naiveté with the Midwest," he said. "There isn't. People there are just as perceptive as anyone else. I think there's a lot of down-to-earth thinking here. I don't think Midwesterners are deceived that easily."

Of course, somewhere inside a bank or national cell phone company there is someone in a marketing department who can answer this question with much more precision than I can.  How? Just by compiling a list of zip codes where the most unfair credit card applications are aggressively dumped into mailboxes.  Where the cable TV costs more and the cell phone service works less.  Is that in Manhattan, Seattle, Los Angeles, Phoenix or Peoria?  I don't know. But after my trip across the great northern states in our nation, I doubt it's in Fargo, or Minneapolis, or Missoula, Mont., or Madison, Wis.

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