Luxury brands/watches/goods; Clouding our mind since ____(*insert birth year)
Hermes. AP. Rolex. Ferrari. Gucci. LV.
Does these brands ring a bell? Do they evoke a certain kind of feelings within you?
On a more slightly more light hearted note this week, we look at the science behind why you should ditch the luxury brands you so deeply desire to become rich.
Is it better to buy a Rolex than a Timex? What about buying a $50 bottle of wine instead of “two-buck Chuck”? They may be worse for your wallet, but buying these luxury items may actually mean you get more enjoyment from the product.
1. Your brain plays tricks on you
For half a century, marketers have observed and recognized that the value of luxury is all in our minds. A 1949 article displayed a study where the sale of women’s pantyhose grew drastically, when retailers increased its price by 14 cents. This suggests that the brain thinks that the higher the price, the higher its value. According to this study, when a particular product has its price increased, it also increases the “blood-oxygen-level-dependent activity in medial orbitofrontal cortex”, which is an area where it is encoded for experienced pleasantness during tasks. So when you purchase a pricier product, your brain changes to let you know that the pricier one is better.
2. Pricier wine tastes better
Studies about wine have shown that pricier wine tastes better. Subjects involved in this study were made to taste 5 different types of wines, which were labeled based on their price, and the subjects were told that they are asked to rate the wine. However, there were only 3 varieties of wines in the 5 bottles that were used. Of which, 2 of the bottles were tasted twice by the subjects, but their bottles were labeled differently (one at a low price and the other at a high price). Unsurprisingly, tasters rated the pricier wine as significantly better that the exact same wine that was labeled as a cheaper wine.
3. “You get what you pay for”
This phrase is no stranger to most of us. Chances are, you probably tell yourself that everyday. Perhaps you bought a coffee machine for $100 instead of the $700 Nespresso machine, and the coffee from the $100 machine doesn’t taste as good? Well in such cases, most likely you would have told yourself “you got what you paid for”. But is this really true? More often than not, cheaper alternatives do work just fine, or even better (friendlier). As you only notice the times when things goes wrong with the cheaper option, instead of counting the times they actually do work, you have subconsciously embedded the idea that pricier items are associated to being better.
4. An expensive buffet tastes better than a cheap buffet
In a recent study, 140 diners were set to go for a buffet at an Italian restaurant. The diners were charged differently at either $8 or $4 for exactly the same food. When asked to rate about the food after finishing their meal, those who paid $8 for the buffet rated the food 11% better than the diners who paid $4 for the exact same food.
5. So presentation plays a part too
Even fast food can taste better if you would just change its presentation. Two Dutch pranksters attended a food show previously, they cut up McDonald’s food and presented it differently and labeled it “organic”. And guess what? Instead of realizing they tasted food from Macs, the people rated the food “rich”, “delicious” and “fresh”. The subject’s perception of the food was great based on the presentation rather than the actual quality of the food.
So what have we learnt from these studies? If you are getting more pleasure from something that you’ve paid a premium for, I guess its fair? But is it morally right to charge consumers a premium for identical products in the market just because they perceive it as more valuable?