[extropy-chat] More on how brains work (buying stuff)

[Keith Henson]

Brain Scans Predict When People Will Buy Products

Science Daily - For the first time, researchers have used functional 
magnetic resonance imaging (fMRI) to determine what parts of the brain are 
active when people consider whether to purchase a product and to predict 
whether or not they ultimately choose to buy the product. The study appears 
in the journal Neuron and was co-authored by scientists at Carnegie Mellon 
University, Stanford University and the MIT Sloan School of Management.

This paper is the latest from the emerging field of neuroeconomics, which 
investigates the mental and neural processes that drive economic 
decision-making. The results could have a profound impact on economic 
theory, because the decision of whether to purchase a product is the most 
basic and pervasive economic behavior.

Previous imaging studies have found that separate parts of the brain are 
activated when people are confronted with financial gains versus financial 
losses. The authors of this latest study believed that distinct brain 
regions would be activated when people were presented with products they 
wish to purchase (representing a potential gain) and when they were 
presented with those products' prices (representing a potential loss). The 
researchers wanted to see if they could then use this information to 
predict when a person would decide to buy a product, and when they would 
pass it up.

Twenty-six adults participated in the study, in which they were given $20 
to spend on a series of products that would be shipped to them. If they 
made no purchases, they would be able to keep the money. The products and 
their prices appeared on a computer screen that the participants viewed 
while lying in an fMRI scanner. The researchers found that when the 
participants were presented with the products, a subcortal brain region 
known as the nucleus accumbens that is associated with the anticipation of 
pleasure was activated. When the subjects were presented with prices that 
were excessive, two things happened: the brain region known as the insula 
was activated and a part of the brain associated with balancing gains 
versus losses -- the medial prefrontal cortex -- was deactivated.

Furthermore, by studying which regions were activated, the authors were 
able to successfully predict whether the study participants would decide to 
purchase each item. Activations of the regions associated with product 
preference and with weighing gains and losses indicated that a person would 
decide to purchase a product. In contrast, when the region associated with 
excessive prices was activated participants chose not to buy a product.

This study challenges the conventional economic account of consumer 
purchases, which views consumers as deciding between the immediate pleasure 
of making a purchase and the delayed pleasures of alternative things for 
which the same money could be used. The results of this paper support an 
alternative perspective that views consumers as trading off the immediate 
pleasure of making a purchase against an immediate pain: the pain of 
forking out the money for the item. The results can explain the growing 
tendency of consumers to overspend when purchasing items with credit cards 
instead of cash, because consumers do not immediately pay for items charged 
to credit cards and the "pain" of the potential loss is minimized. Economic 
policies designed to promote savings would thus need to take this into 
account. It also suggests that differences in how much people spend and 
save may be partly explained by differences in the degree to which they 
find spending money painful.

The Neuron paper was authored by Scott Rick and George Loewenstein of the 
Department of Social and Decisions Sciences at Carnegie Mellon; Brian 
Knutson and G. Elliott Wimmer of the Department of Psychology at Stanford; 
and Drazen Prelec at MIT's Sloan School of Management.
Note: This story has been adapted from a news release issued by Carnegie 
Mellon University.
Source: Carnegie Mellon University
http://www.sciencedaily.com/releases/2007/01/070103201418.htm