Price can determine quality - for women at least. That’s the message of a new paper (pdf) by researchers at the Stockholm School of Economics.
They got some Americans to taste two bottles of red wine, one costing $5 and one $40. Women who were told of the price of the expensive bottle before tasting it rated the wine much more favourably than did women who tasted it blind. For men, however, knowing the price made little difference to their rating.
And being told the price of the cheap bottle before tasting it made no difference to how the wine was rated.
This suggests that expensiveness can help to signal quality - at least to women - although cheapness is not necessarily a signal of inferiority.
This half-corroborates a finding of Dan Ariely, discussed in his great book Predictably Irrational - that expectations shape experiences. So if we expect something to taste nice, it will. This effect works even for products that have no material effect; Ariely has show that expensive placebos work better than cheap ones.
This laboratory evidence has real-world implications. It might explain why cosmetics companies can sell expensive products - mostly to women! - even though they are of dubious merit.
But might it also have a political application? Could it be that support for public spending increases has been based, in part, on the belief that expensive means better?
They got some Americans to taste two bottles of red wine, one costing $5 and one $40. Women who were told of the price of the expensive bottle before tasting it rated the wine much more favourably than did women who tasted it blind. For men, however, knowing the price made little difference to their rating.
And being told the price of the cheap bottle before tasting it made no difference to how the wine was rated.
This suggests that expensiveness can help to signal quality - at least to women - although cheapness is not necessarily a signal of inferiority.
This half-corroborates a finding of Dan Ariely, discussed in his great book Predictably Irrational - that expectations shape experiences. So if we expect something to taste nice, it will. This effect works even for products that have no material effect; Ariely has show that expensive placebos work better than cheap ones.
This laboratory evidence has real-world implications. It might explain why cosmetics companies can sell expensive products - mostly to women! - even though they are of dubious merit.
But might it also have a political application? Could it be that support for public spending increases has been based, in part, on the belief that expensive means better?
It's accepted folklore in the wine industry (makers and sellers, at least here in NZ) that price is a key influencer on perceived quality. I hadn't seen the gender slant with wine before, but I don't really believe it. My gut feel is that more extensive study would show that men also can be significantly influenced by price vis a vis value in wine (and other things). I volunteer to be a guinea pig.
Posted by: Jim Donovan | April 29, 2009 at 02:31 PM
Sexist explanation: women expect men to buy their wine for them; more expensive wine is bought by richer men, who are also more desirable as mates for all the reasons we know. Ergo, wine known to be more expensive will be more interesting, for quite other reasons than quality. And since most people don't actually know what quality wine tastes like, other than real floor-polish stuff, there's all the explanation you need.
Next?
Posted by: Andrew Duffin | April 29, 2009 at 02:54 PM
Most people, most of the time, take price to be one indicator of quality. Read Which? and similar magazines in other countries - or look at internet assessment sites - and you will observe that the correlation between assessed quality and price is not all that high.
Politics may be an extreme case. Take one example. There was conclusive evidence over 40 years ago, evidence that still stands for all developed countries, showing that extra money poured into schools produces very little improvement in education. I long ago lost count of the number of governments that have sought, and often achieved, popularity by spending large additional amounts on schools. In spending lavishly on schools to no real gain, New Labour is in numerous, if not good, company.
Posted by: Diversity | April 29, 2009 at 03:43 PM
Ariely's book is quite good. he also finds that if you spend any money on something you think it's better than if you didn't have to, which might be another argument for a CBI? Then again he also found I think that takeup of things was much higher if they were free than even 1p, so that might work the other way.
Posted by: Matthew | April 29, 2009 at 05:48 PM
As a possible phenomenon in consumer behaviour, indexing quality by price among other anomalies was recognised long ago. Try Harvey Leibenstein on: Bandwagon, Snob and Veblen Effects in the Theory of Consumer Demand, in the QJE 1950
http://areadocenti.eco.unicas.it/mbianchi/LEIBENSTEIN.50.QJE.pdf
For a presentation:
http://www.marshall.edu/cber/staff/key/hicksm/presentation4.pdf
There are a few, but just a few, advantages in being an ancient.
Posted by: Bob B | April 29, 2009 at 08:11 PM
Really good article! I like this line: "if we expect something to taste nice, it will"..
Posted by: Steve | April 30, 2009 at 11:38 AM
Is the keyword here "Americans"?
Posted by: Bruce | April 30, 2009 at 01:42 PM
Price very much determines quality in so many fields.
Posted by: jameshigham | April 30, 2009 at 04:13 PM
Market traders used to separate identical produce into two different piles and charge more for one of them in the knowledge that some people always assume that a more expensive product must be a better quality one.
Posted by: Mike Power | May 05, 2009 at 05:12 PM
The post is very intellectually written, with lots of valuable information.
Posted by: H Miracle Review | April 27, 2011 at 07:04 AM