Pain versus pleasure and why you buy

Posted on | July 27, 2007 | 3 Comments

One of the recent delights of my life was being named to Mary’s short list of blogs that maker her think. Being a big fan of thinking, I consider that a major honor.

And, while I expect I’ll still occasionally forgo the thoughtful profundity in favor of the profoundly silly, it does give me something worthwhile to live up to.

Speaking of thinking, not sure how I managed to miss this but there’s a relatively new piece of research that ought to make you stop and think a bit.

Seems that a group of researchers led by George Loewenstein of the University of Chicago recently hooked up some subjects to a magnetic resonance imaging (MRI) machine in order to take pictures of brain activity during a purchase activity. The experimental set up went like this:

Subjects in Loewenstein’s buying choices studies lie face up on the gurney, with a high-tech mask of sorts placed over their heads, and are slid into the machine headfirst. While lying inside, the volunteers view images through the mask in four-second intervals. First they see a college-friendly product such as a USB flash drive; a Napoleon Dynamite DVD; or a waterproof, disposable camera. The product is followed by its price, which is followed by a screen asking them to make a decision. The volunteers, while remaining as still as possible, answer using handheld devices. They are given a $40 credit at the start of testing and are told that if they decided to buy any of the products (at about 75 percent below retail), two of their choices would be randomly given to them at the end of the test and they could keep any leftover change. If they choose not to buy, they pocket 40 bucks.

What they found was that when people view what might be an attractive acquisition, the part of the brain that processes pleasure (the nucleus accumbens) was activated. But then, when they were shown the price, two other parts of the brain got fired up — the part that governs rational thought (medial prefrontal cortex) and the part associated with anticipated pain (the insular cortex).

When the actual buying decision was going on, it became clear that if the subject considered the price too steep, the rational part slowed down and the pain processing center was the most active. When the subject decided to buy, it was the rational part that was more active.

In other words, there comes a certain price point at which it is literally painful for people to spend money.

Possibly, you marketers out there will look at this stuff and say, “We knew that.” Isn’t that why marketers always talk about evoking emotional responses in people by appealing to their desire for money, power, beauty, etc.

But the breakthrough part of this research has less to do with marketing than it has to do with economics. Traditionally, economists assumed that people made purchasing decisions based on rational decisions involving anticipated pleasure versus delayed gratification — that is, how much fun it’ll be to have this thing now versus how much more fun it’ll be to be able to buy other stuff later.

But Loewenstein’s research suggests that the real buying brain fight is between anticipated pleasure and anticipated pain — that is, how much fun it’ll be to have this thing versus how much it’ll hurt to part with the money.

(Loewenstein even theorizes that there is something about a credit card purchase that is less painful than a cash purchase, something that numbs the brain to the pain of parting with their money and makes it easier to buy. More research to come.)

The part that truly fascinates me is that implication that it actually hurts to spend money. It is interesting both because of the way we have structured our consumption-driven economy and because of other research that has found that having more stuff beyond a certain point doesn’t necessarily make people any happier.

All of that implies that we in these United States have put ourselves into a terrible bind.

We deliberately make products that wear out and have to be replaced, forcing us to continually spend money. And we have a kind of “keeping up with the Joneses” mentality that pressures us to buy things we may or may not want just because “everybody’s got one” and not having one somehow automatically labels us as poverty-stricken or unfashionable or out-of-touch.

We become convinced that having lots of stuff will make us popular, attractive, fashionable, admirable, whatever.

But then, when we buy the stuff that is supposed to make us all those things, we discover that they don’t. Or we discover that whatever they confer on us still doesn’t make us happy. So we go on to buy the next thing that promises us all this wonderfulness, meanwhile wounding ourselves every time we make another useless purchase.

No wonder Americans are reputed to be among the most miserable (albeit rich) people on the planet.

All this stuff keeps our economy chugging but none of it brings people the stuff that psychologists know they really need to be happy: love, friendship, community.

(Pause for musical interlude … )

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

People are social animals, after all. (I wonder if that is the real reason why the Internet has become such a critical technology, because it is interactive?) In the world we have created for ourselves, we regularly sacrifice that to the Economic Growth God.

Is it worth it?

You tell me.

(And props to Chris for pointing us to this one.)

[tags]George Loewenstein, Christopher Carfi, neuroeconomics, marketing, purchase decisions[/tags]

Comments