In Luxury Goods, Price is Part of the Value

Luxury vendors have long known that high price is part of their appeal. Not the price per se, but the exclusivity that comes with it. Like a peacock’s tail, the conspicuous consumption of goods that lack any practical purpose is a display of status, which has a powerful draw on the human psyche. New research indicates that our brains react differently to the consumption of expensive goods. Researches used functional magnetic resonance image (fMRI) to measure blood flow to different areas of the brain while subjects drank wine. Researches used 3 different wines, costing $5, $35, and $90 per bottle. However, they had the subjects sample the $5 bottle twice, once under the impression that it cost $5, and once under the impression that it cost $45. They also double-sampled the $90 bottle, once at its actual price, and once under the impression that it cost $10. Participants experienced more activity in the brains’ pleasure centers when they thought they were drinking more expensive wine. They also reported that the wine they thought was more expensive tasted better. What I want to know is: why does no one invite me to be part of these studies?

On a related note, Forbes discusses the luxury pricing game, and gives some examples of very expensive goods.

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