You might have heard of the placebo effect. If you haven’t that’s fine, I didn’t learn about it until I was in the 10th grade (thanks Mr. Walker). The idea is this: If you give a pill with no medical properties to someone, but lie to the person to give the impression that it will help him/her, it may actually him/her. One could call it the power of positive thinking.
One concept that I’ve run into lately is the Price Placebo effect. Truth be told, I didn’t know the name of this phenomenon until recently. I had to ask in the comments of my MonaVie article. (MonaVie is a $45 bottle of juice that has zealous believers that it’s a good value.) Why did this come up? I could start the story at a number of places, but I should probably go with one that is geographically close to my home, Stanford University.
In January of 2008, Stanford posted an interesting study on wine. Essentially the result was that if you told someone they were drinking an expensive, they’d like it more than if you told them it was a cheap wine – even if it is the exact same wine! The Stanford researcher called this phenomenon the Price-Placebo Effect. I don’t know why this is surprising as we see people pay for brand name medicine and batteries, when most everyone agrees that it is the same product as the generics – just different labeling.
The Price-Placebo Effect isn’t just about enjoying of a product more because you paid more. People told they were spending more money for a energy drink actually performed better on mental tasks – even when those studied were explicitly told that the drinks were identical. (Those interested in another Price-Placebo Effect example involving Eliot Spitzer and Ashley Alexandra Dupre are encouraged to click that Washington Post link, but I won’t touch that subject here).
The Price-Placebo Effect explains a lot about the psychology of our purchasing patterns. I know I’m a victim of it especially when it comes to wine as in the Stanford study. Bringing it back to MonaVie, the Price-Placebo Effect explains why people think it’s somehow better than other juices even when scientific studies show that it’s not. After all, if it costs 20 times as much per ounce, it really must be better, right? Wrong.