Price and utility

Jonah Lehrer, author of the celebrated How We Decide, describes an experiment suggesting a link between what something costs and how well we think it will work.

As it happens, the same experiment is described in the decidedly less-celebrated Buying In. But that’s not why I bring it up. I bring it up because an even more powerful demonstration of the same tendency was demonstrated in a more recent study involving the fictitious painkiller Veladone-Rx.

You might remember that if you’re a regular here, because that study was the inspiration for a 48-Hour T-Shirt. The T is no longer available, but the research description remains. It’s still one of my favorite studies ever (the upshot is that people found a placebo painkiller effective if it cost a lot — but not very effective if it was cheap).

For yet another discussion of how a higher price actually enhances consumer preception of utility, see this Murketing post about paying for garbage. (That post includes, though it is not quite about, a real-world example of prices and apparel that I think is harder to rebut than the ones Lehrer offers, but that’s just my bias.)