Over the past week or so, I’ve discovered the joys of the Freakonomics podcast. I read and enjoyed the book Freakonomics shortly after it was released, but it took me years to discover the Freakonomics podcast.
One of the beauties of this podcast is that not only do I enjoy it but my kids are (more often than not) fascinated by the episodes. And, believe it or not, one of the episodes that our ten year old liked best was the one where they talked about whether or not expensive wines taste better.
During this particular episode, they highlighted a couple of fascinating studies. In one, the researchers found that individuals who don’t know how much a particular wine costs don’t actually enjoy more expensive wines more. In another, they found that people will rate a wine they believe to be more expensive as better than another wine — even if the two wines are, in fact, the same.
Amazing.
And even more amazing is that there is scientific evidence that price perceptions have a measurable biological effect on people. This wasn’t covered in the podcast, but… Not only does the (apparent) price of wine increase subjective reports of “flavor pleasantness, ” it also increases activity in the medial orbitofrontal cortex.
Not sure what that is? Neither was I. But apparently it’s the part of the brain that’s thought to be responsible for “experienced pleasantness during experiential tasks.” That’s right, your brain actually responds to perceived price differences.
In other words, your mind may well be literally playing tricks on you. And it could be helping to drain your wallet. Then again, if you really do enjoy it more, maybe the added cost (even if it’s artificial) is worth it. What do you think?
It kind of reminds me of this clip from Penn and Teller’s BS. There is some foul language, if you are offended by that.
http://www.youtube.com/watch?v=a9J1b3MqiX8
Isn’t this the concept of the Veblen Good? See Wikipedia. I believe it is.
Don’t know if it was in the podcast, but another reason for expensive wine is so that cheaper wines look a lot more reasonably priced. If you see a $50 bottle of wine next to a $120 bottle, the $50 looks like a bargain.
Ha, another reason to ask higher prices for your services, you will be valued more and increase your bosses orbital cortex activity. It also explains why $10.00 cupcakes are doing so well. I swear my grandma’s cupcakes from scratch taste better.
If you don’t know the difference and don’t care, the obviously go for the cheaper wine.
But if knowing that you’re buying an expensive wine is actually going to make you happier, then you have to go all out!
Better yet, you should always buy obscure wines and tell people they are expensive so that they enjoy the experience more!
Thanks, Clark. I’ll check it out.
There are numerous wines on the market that are excellent for less than $10. Why pay more?
A good general interest book to read (or listen to) in this regard is:
The Price of Everything: Solving the Mystery of Why We Pay What We Do.
I agree, I’ve had inexpensive bottles taste amazing and more expensive ones being a letdown. Same goes for beer too (Miller Highlife is exceptionally good for its price point). I dont much worry about the prices of wine these days, more of a hobby now to explore all the varieties (same goes for the micro-brews).
Thanks for the tip on the Freakonomics podcast.