The Psychology of Money: The Power of Suggestion Can Cost You

July 9th, 2008 • Related • Filed Under
feature photo Digg!

 

A variety of psychological and marketing studies have shown that when American’s pay more for something, it becomes more valuable to them - whether the product is really more valuable or not. Here’s some examples:

Medicine

–John Grohol, in his book, Predicably Irrational, describes a case study where

“the cost of a pain pill was directly related to pain relief experienced by people taking the pill. A $2.50 pill relieved more pain, subjectively measured, as opposed to the $0.10 pill (even though both were the exact same pill).”

He also found that those taking name-brand medications nearly always felt it was much more effective than the equivalent generic version. Yet by law, generics must be manufactured exactly as the name brand.

In other medical studies, the placebo effect has been well documented. Patients see marked improvements in their health by taking nothing more than an inert substance. In the early 1800’s it was an actual form of treatment. Doctors gave patients suffering great pain sugar pills, but told them it was pain medicine. The patients almost always felt better after taking the pills.

This unorthodox practice would never be allowed today, but recent studies have found that doctors who have been the target of pharmaceutical marketing campaigns believe one drug will be more effective than another, when in fact, it may not be.

Wine

–The California Institute of Technology found that when consumers were served two identical bottles of wine, one priced at $90 dollars and the other at $10 dollars, the $90 dollar bottle was nearly always chosen as the better tasting wine. A similar study was conducted by the Stanford Business School with identical results.

 

 

Athletics

“Forty-two “team sport” athletes were recruited to perform a series of 30-meter sprints. After collecting baseline times, the athletes were given 200 mg of cornstarch in a gelatin capsule, but, they were told that it was an ergogenic substance and would likely improve their sprint times. Twenty minutes after taking the capsule, the athletes repeated the sprints. Performance was indeed better after the athletes ingested the cornstarch placebo (Beedie CJ, et al. 2007).”

Pepsi or Coke?

If you grew up in the 1970’s like me, you might recall the famous John Belushi “No Coke, Pepsi” routine on Saturday Night Live. Whenever a customer tried to order a Coke, Belushi would reply, as only John Belushi could, “No Coke, Pepsi.” This hilarious satirical look at the Coke and Pepsi marketing battle - among other things - was a regular skit spot for a number of seasons.

 

Clearly, marketing and sales campaigns take advantage of the power of suggestion. How do we protect ourselves from buying things we don’t really want or need?

In many ways, we can’t.

The manipulative effect can be so strong, yet so unconscious, that we don’t even know it’s happening.

What you can do: The sooner you become aware of the marketing tactic, the sooner you can extract yourself from its control. To that end, we must continually strive to bring our unconscious into our conscience.

Rate this:
2.8 (1 person)

Related Posts

There Are 11 Responses So Far. »

  1. Comment by no imageSam (Who am I?) on 10 July 2008:

    In other words, the human psyche has internal insight to control our individual being…the way we view our environments, events and people can be fulfilling and happy if we allow our psyche to free itself — through power of suggestion.

    Sams last blog post..What Does It Take To Be Filthy Rich?

    Rate this:
    		2.5

  2. Comment by no imagePinyo (Who am I?) on 11 July 2008:

    Excellent post. I love your exploration of the human psyche. Now, would you like to buy my used 98 Ford Contour for $10k — it’s a bit more expensive but it’s better than other Contours. :-)
    Pinyos last blog post..Moolanomy’s Family Vacation Wrap Up

    Rate this:
    		2.9

  3. Comment by no imageTristan (Who am I?) on 11 July 2008:

    Interesting post, I know exactly what you mean about how marketing affects the way you think. It’s only really in these difficult economic times that I have found myself looking more closely at what I’m buying and wondering, is there really any difference between the brands that are advertised and those that aren’t?

    Tristans last blog post..Passive income opportunity in the health and wellbeing market

    Rate this:
    		2.5

  4. Comment by no imageProphet (Who am I?) on 11 July 2008:

    Although I believe in the power of suggestion. One thing I don’t agree with is the generic argument. I do not believe they are always equivalent. Especially when it come to certain anti-depressants. I have seen people who were taking the non generic version and then switched to a generic version UNKNOWN to them. The switch happened without them knowing and for the next several days there was a VERY noticeable difference. Once switched back to the non-generic it started working again. This was all done without the patient knowing so the “placebo” affect would not apply.

    Prophets last blog post..How to find a trading strategy? Pt.2

    Rate this:
    		2.5

  5. Comment by no imageLisa (Who am I?) on 12 July 2008:

    @Pinyo -Sounds like a good deal…:)
    @Tristan- I know what you mean. I know the company I work for makes some products for other companies that are made exactly as our own
    @ Prophets - I have heard similar stories. I wonder if the FDA has enough manpower to police all the companies manufacturing generics. And some of them are made in other countries, too. They probably hardly ever audit those places.

    Thanks, everyone, for your thoughts.
    Lisa

    Rate this:
    		2.5

  6. Comment by no imageJena Isle (Who am I?) on 16 July 2008:

    I agree with your example about how people’s perception could affect their reactions. If a person thinks that the branded medicine is more effective than the generic and vice versa then unconcsciously the branded med would indeed have a better effect, likewise, it it’s vice-versa.

    I had one specific encounter about such occurrence when a patient who believed she was ill came for a check-up. The diagnosis of the doctor was that she has no pathological illness, and that she was just hysterical. The patient insisted though that she was sick. So what the doctor did, was to order an injection of “placebo” (which has no curtative effects -as it maybe plain dist H20.)
    Of course, the patiend did not know this, so she got well after the injection .

    The power of the mind is astounding at times.

    Jena Isles last blog post..CHAPTER 10 - UMMA AYAM SINSANA (WHERE ARE YOU NOW?)

    Rate this:
    		3.1

  7. Comment by Trackbacks on 6 September 2008:

Post a Response