Brands, placebos & tuition fees

Expensive brands are better than cheap ones, even if there’s no objective difference between them. This is the paradoxical finding of a new paper (pdf) by Dan Ariely.
He and his colleagues got subjects to read out a list of 84 unrelated words whilst looking into a bright light wearing sunglasses. Everyone got the same pair of glasses, except that half of subjects got a pair labelled Ray-Ban and half got a pair labelled with a cheap brand (Mango).
Subjects wearing the “Ray-Bans” made almost half as many errors as those wearing “Mangos”, and completed the task much faster.
This suggests that sunglasses with a prestigious brand label are more effective than ones with a cheaper label, even if there is no other difference between them.
This is not merely a quirk of sunglasses. Ariely and his colleagues also found that earmuffs with a big-name label worked better than identical muffs with a cheap label, and that chamomile tea with a good brand name worked better in raising concentration than the same tea with a lesser brand.
This suggests that brand names have a placebo effect. They fool people (pdf)  into believing they are superior, and this belief proves self-fulfilling. And like placebos, expensive ones work better than cheap ones.
Herein, perhaps, lies a justification for so many universities trying to charge the maximum £9000pa tuition fee. Doing this signals that the university is a top brand, and the brand placebo effect should then cause students to do better. Add to this the post-purchase rationalization effect - people convince themselves that they made a good buy - and such high fees might justify themselves, regardless of the intrinsic quality of the education offered.
Demand curves needn't slope downwards.

Comments

[Cahal Moran]

People are also likely to work harder if they pay more.

Of course, universities realised all of this ages ago, which is why I have yet to see any charge less than £9000, and why I expect the few that do to rise pretty fast.

[botogol]

universities also need to charge £9000 to the students who can/will pay that in order to finance the free/cheap places that they want to offer to students who can't/won't pay it.

[beetlebug]

Surely people are likely to be more demanding if they pay more than work harder??! I don't watch TV harder on my beautiful 40" Sony than I do on my cheapo Tesco's Technika 17". But I expect more of the Sony than I do of the Technika...

[markey]

Or ... the cheap pair had poor optical properties. Were the optical properties the same? I've had cheap sunglasses which were nothing more than translucent, vision distorting bits of plastic.

I don't fall for the whole 'designer' label scam - my jeans are Levis (they do longer inside legs than other brands and have a button fly) not Gucci but neither are they Tesco - not sure what anatomical model they use for their cut but it sure ain't like my legs.

[Kartoffel]

@markey, from the paper: "Visual task: Participants wearings unglasses tagged Ray-Ban made fewer errors than those wearing the same sunglasses, but tagged Mango"