The Price of Everything Read Online Free Page A

costs and benefits. That’s because market transactions do not necessarily provide people with what they want; they provide people with what they think they want. These two things are not the same. Consumers often have but the most tenuous grasp of why they pay what they do for a given object of their desire. Sometimes they don’t know why the object is desirable at all. Moved by any number of unacknowledged biases, they are easy prey to manipulative devices deployed by those who want to sell them things.
    Prices help us understand these cognitive lacunae. They provide a road map of people’s psychological quirks, of their fears, their unacknowledged constraints. Prices—how they are set, how people react to them—can tell us who people really are.
    Most of us have heard of the placebo effect—in which a pill with no therapeutic properties relieves a real ailment by making us believe that we are being cured, setting in motion some inner psychological process. A few years ago, psychologist Dan Ariely from the Massachusetts Institute of Technology and some colleagues performed an experiment that uncovered an interesting variant. They told a bunch of students they were getting a new type of painkiller but gave them a placebo instead. Then the researchers made up the placebo’s price. Subjects who were told that the pill cost $2.50 reported much deeper pain reduction than those who were told it was bought on the cheap, at the bulk price of $0.10.
    Consider lap dancing. Lust is a reasonable explanation for the popularity of the service, about as close as one can legally get to paying for sex outside the state of Nevada. Yet apparently there are hidden gradations of desire that modulate our willingness to pay. In an exploration of the “gentlemen’s club” scene, psychologists from the University of New Mexico found that lap dancers who were not on the pill made much more money in the most fertile phase of their menstrual cycle.
    Dancers can’t charge explicitly for their services because that would run afoul of laws against solicitation. Instead, they rely on “tips,” usually enforced by large, muscled bouncers. In Albuquerque’s clubs, according to the study, the average tip for a three-minute dance is about fourteen dollars.
    Perhaps dancers smell more enticing when they are at the peak of their fertility. Maybe they grind their hips more enthusiastically or whisper more alluring nothings. The fact is that dancers who are not on the pill made $354 a night when they were at their most fertile, about $90 more than in the ten days before menstruation and about $170 more than during menstruation.
    Dancers on the pill made less money than those who were not, and their earnings were much less sensitive to the menstrual cycle. But perhaps the most interesting finding is that neither dancers nor their patrons have a clue of the effect of the menstrual cycle on their pay. It all happens below the radar.
     
     
    THE TASTES IN shopping of my six-year-old are driven by the fictitious character on the label, oblivious to price, flavor, texture, or even the purpose of the desired item. At his behest, I’ve bought Dr. Seuss shampoo, Spider-Man toothbrushes, and Cinderella toothpaste. He alternates between Dora the Explorer and SpongeBob yogurt. His tastes are not unique. A study by the people who make Sesame Street found that young children who are offered a choice between chocolate and broccoli are more than twice as likely to choose the vegetable when it has an Elmo sticker.
    Grown-ups are expected to know better. Yet we indulge in more extreme follies, paying often-stratospheric prices for things of debatable value. People will travel across town to save $20 off a $100 sweater but not to save $20 off a $1,000 computer, an odd choice considering that both actions are priced equally: $20 for a trip across town. And, unlike my six-year-old son, who couldn’t care less what toothpaste costs, I may be more willing to buy