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Experiments in shopping habits January 12, 2007

Posted by dorigo in news, science.

Through  three quarks daily (http://www.3quarksdaily.com/) I got to read a quite interesting article on the Economist about the nature of our spending habits and how we evaluate costs and benefits in our brain when deciding on a purchase.

Dr Loewenstein, an economist at Carnegie Mellon, teamed up with psychologists Brian Knutson of Stanford and Drazen Prelec of the MIT to study the matter through experiment. The team obtained information about the cognitive processes of volunteers asked to choose whether to buy goods displayed on a screen by using fMRI, a functional magnetic resonance imaging technique capable of recording local blood flow and oxygen consumption.

Quoting from the article (http://www.economist.com/science/displayStory.cfm?story_id=8516366), Dr. Loewenstein’s hypothesis is that 

rather than weighing the present good against future alternatives, as orthodox economics suggests happens, people actually balance the immediate pleasure of the prospective possession of a product with the immediate pain of paying for it.

The team will now design new experiments to verify whether

in the same individuals, buying with credit cards eases the pain compared with paying by cash. If they find that it does, then credit cards may have to join the list of things such as fatty and sugary foods, and recreational drugs, that subvert human instincts in ways that seem pleasurable at the time but can have a long and malign aftertaste.

Towards a ban of credit cards ?

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