Do Luxury Brands Benefit from Income Inequality?

I like to think that despite being wealthier than most Americans, I remain immune to materialistic desires. I drive a 17-year-old Honda Accord and wouldn’t know designer clothes if you wrapped me in them, head to toe. But it turns out that I’m wrong. I’m not above materialism despite my wealth and social status. I’m immune because of it. Since I don’t need to signal my social value, I can save my money for other purposes.
In places with great income inequality, those people with lower incomes live under great social stress. Their low position in the social hierarchy is more obvious and more consequential. In response, some poor people purchase the kinds of good that create the impression that they have social resources to spare, even when they are cash-strapped. And people living in low income neighborhoods – the ones who are relatively well-off compared to their neighbors – are nevertheless worried that they’ll be misperceived as resource poor. So they purchase expensive and conspicuous goods, to make sure their resources are visible to outsiders.
As an example of this behavior, researchers recently examined Google search trends across the U.S., and found that people in states with relatively high income inequality were more likely to search for luxury brands than those in other states. Looking for the latest from Ralph Lauren (who, I discovered, manufactures overly expensive clothes)? The frequency of such Google searches is higher in Mississippi than Iowa (relative to more generic Google searches, like for “weather” ), in Mississippi than Iowa, and in New York than Nebraska. Basically, people living amidst greater income inequality are more interested in luxury goods.
(To read the rest of this article, please visit Forbes.)

Warning: Bicycle Helmets Could Be Hazardous for Your Health


A bicycle helmet prevented me from experiencing a major head injury. But did it promote the very behavior that caused me to crash my bike?
It was autumn in Michigan, and I was riding my mountain bike along a lakeside pathway. I was heading towards a twisty boardwalk that led up to a bridge arching over a stream. Instead of slowing down, I accelerated through the twists and turns, enjoying the thrill of my maneuverings. Until…
Whisk! My wheels passed over a (predictable) patch of wet leaves, just as I was making a sharp turn. My body slammed violently into the boardwalk, the brunt of force absorbed by my left shoulder and the left side of my bike helmet. My body was scraped up, my neck was stiff for three weeks, my handlebars were ruined and my head…was fine. My helmet saved me from a potentially devastating head injury. Hurrah for bike helmets.
But would I have ridden so carelessly if I hadn’t been wearing a helmet?
Helmets change behavior. When we feel impervious to injury, we act in ways that increase our chance of bodily harm. Indeed, helmets can have powerful, unconscious effects on our behavior.
(To read the rest of this article, please visit Forbes.)

Death By Salad: Two Reasons 'Healthy' Food Could Make You Fat

In an effort to lose weight, you pass on the steak sizzler at your favorite family restaurant and settle, instead, for a healthy salad. But you might be in for a dieting double whammy. First off, the salad probably has more calories than you realize. For example, Applebee’s Grilled Chicken Caesar Salad packs a whopping 800 calories (a full 170 calories more than a Whopper). When you order that salad thinking you’re cutting calories, you’re wrong.
As if underestimating calories wasn’t bad enough, there’s a second problem with that salad–your body is about to play a sinister trick on you. As you engorge on all 800 calories of the salad, your brain, convinced the salad is healthy, convinces your stomach that it is not full. When people believe food is healthy, they experience that food as being less filling .
Not convinced? Consider this: A team of researchers gave college students a cookie to eat, telling half of them the cookie was “healthy” with “high levels of proteins, fibers and vitamins” and telling the other half it was “unhealthy” with “high levels of sugars, fats and carbohydrates.” Immediately after eating the cookie, and 45 minutes later, the researchers asked people how hungry they were. They found out that people who ate what they thought was a “healthy cookie” were hungrier.
(To read the rest of this post, please visit Forbes.)

A Surprising Way to Stop Eating so Many Brownies

I know why I sometimes eat too many brownies. They taste great! The same goes, of course, for a whole slew of desserts–I love me my strawberry rhubarb pie, and I never say no to a ginger snap. And while a touch of dessert is often a fine way to top off dinner, many of us get in trouble when we gorge on desserts.
So how can we get a taste of dessert without overindulging? This might sound weird, but try eating in front of a mirror–it will make junk food taste less delicious.
Bear with me while I explain the science behind this weird mirror research, and then show how that the finding is relevant whether or not you plan to actually eat in front of a mirror.
Normally, we think of how food tastes as being an objective phenomenon. Our taste buds tell us whether food is salty or sweet, tart or bland. But behavioral science has shown that our taste perceptions are influenced by a slew of unconscious factors. Give kids apples from a brown paper bag–meh. From a McDonald’s brown paper bag–yummy! Put green (tasteless) food coloring in a glass of orange juice–yuk! Tell someone a cracker is healthy–yawn. Describe the same cracker as unhealthy–delish!
(To read the rest of this article, please visit Forbes.)

Does Having Too Much Money Make Us Stupid?

As a science, economics does not always succeed at predicting how humans behave. The discipline assumes a level of rationality, and an ability to process complex information, that far exceeds human capacity. But as a standard for how people ought to behave, economics provides an excellent set of lessons. Consider the economic principle of consistency in financial trade-offs. If you are purchasing an appliance at a chain store, for example, and find out the product you are buying is $50 cheaper at the store across town, rational economic choice would ask you to ponder whether the time and expense and hassle of that cross town trip is worth the $50 in savings. That pondering – that economic decision – should be unchanged regardless whether the appliance you are purchasing will cost you $100 or $1000.

But of course when faced with this scenario, people are not economically or logically consistent. When imagining the purchase of a $100 appliance, far more people report being likely to travel to save $50 (a 50% savings!) than when they are asked to imagine that the original purchase price was $1000, and the $50 reduction feels barely noticeable.

Aren’t people cute? Isn’t inconsistency and sloppy economic reasoning adorable?

You might even wonder whether the people who exhibit this kind of inconsistent behavior simply do not understand the value of time and money. Maybe they don’t have enough economic savvy to think carefully about trade-offs, like this one between time/effort and money.

Or maybe they simply have too much money to bother to be consistent! According to an article by Anuj Shah and colleagues, people’s economic reasoning – their consistency in the face of economic trade-offs – is improved when they are faced with scarcity.   Over a series of scenarios, they found that people with little money to spare proved to be much more consistent in making economic decisions.

Here’s one of their scenarios, a famous one in the behavioral economics literature.

(To read the rest of this article, please visit Forbes.)

Using Behavioral Economics to Design Smarter Physician Incentives

Last year, I joined Zeke Emanuel and some other great people in publishing an article on how to use the insights of behavioral economics to nudge physicians towards providing high-value care. Here is a link to that article. To give you a teaser, here are some of the principles we drew upon:
Using Behavioral Economics to Design Smarter Physician Incentives 1
And here are ways to make use of the principles:
Using Behavioral Economics to Design Smarter Physician Incentives 2
Eager to see these ideas put into practice!

Chew on This: Willpower Predicts How Quickly You Respond to the Taste of Food

Taste versus health: That’s a trade-off we are often faced with when deciding what to eat. Some foods are bad for our health but happen to taste quite good. All of us have limited willpower, and when we are exhausted those unhealthy foods become harder to resist. But did you know that when willpower is depleted, the relative speed with which our brains process information on taste versus healthiness changes?

When you run out of self-control, the part of your brain that tells you to eat healthily lags behind the part telling you to eat junk food.

This conclusion follows from research using what behavioral scientists call a mouse lab – not a facility where researchers experiment on mice but, instead, a lab where people respond to computer-based surveys and the researchers track the movement of the mouse controlling the computer cursor. In a study led by Nicolette Sullivan from Caltech (safety school!), researchers placed participants in front of computer screens and gave them pictures of two foods, asking them which one they would most like to eat. Instead of looking only at which food people eventually chose, they looked at the wandering of the cursor – a participant might first start directing the cursor towards the donut before swerving it in the direction of the salad. That pattern would suggest that the person’s early preferences were for the donut, but were later overridden by other considerations.

Here’s what they found.

(To read the rest of this article, please visit Forbes.)

How to Keep Santa from Making Our Kids Fat –Three Ways to Reduce Childhood Obesity

The holidays are upon us. It’s a time to celebrate with loved ones, maybe even enjoy a well-earned vacation. But it is also a time that many of us gain weight, with children developing eating habits that could set them on a trajectory towards being overweight or obese.

It is really crucial to help our children avoid gaining too much weight. Because once people become obese, a myriad of biologic factors conspire against their efforts to lose weight. Consider a study that came out last year showing what happened to contestants on the Biggest Loser – most of whom gained back most of the weight they lost while participating on the television show. Or look at the difficulty even wealthy people with great willpower have sustaining weight loss, people like Mike Huckabee and Oprah Winfrey.

That’s why the key to combating America’s obesity problem is to prevent children from developing obesity.

But how can we keep our children from becoming obese? All of us with children can do our best to serve our kids healthy, appropriately portioned meals, while encouraging them to be physically active. But what about us as a society – what can we do? What policies can we embrace that will reduce the rate of childhood obesity?

(To read the rest of this article, please visit Forbes.)

Surprise – Here's What Happens When You Try to Help Your Spouse Lost Weight


Ever wonder why your spouse eats too much even when you warn him or her not to eat too much? It could be because your admonitions put your spouse into a state of reactance, causing them to go against your advice just to prove their independence.
Reactance is a state of mind that arises when people feel that their freedom is being restricted. Reactance can be triggered by random events–when a food is not in stock at a grocery store, some people will be upset that they’ve lost the ability to purchase that food, even if they didn’t care that much about the item previously. Public service announcements, or PSAs, can trigger reactance, too–lecturing people on what they should or shouldn’t do can create backlash, where people do the bad thing just to prove they can’t be controlled.
When I first learned about psychology reactance, I thought about my older brother. It was a cold Minnesota day (sorry for the redundancy), and my then nine-year-old brother was staring longingly at a ribbon of ice that had wrapped itself around a metal railing. My parents, reading his mind, warned him not to lick it. He promptly took a lick and his tongue stuck to the frozen metal like it planned to remain there until April. My parents rescued him by pouring lukewarm water over the railing.
The lesson? Sometimes the worst way to keep people from engaging in harmful behaviors is to tell them to avoid those behaviors.
(To read the rest of this article, please visit Forbes.)

Why Charging Smokers More for Health Insurance Costs All of Us Money


Cigarette smokers have rights. No one should be able to tell an adult that she can’t spend her hard earned money on cigarettes. But non-smokers have rights, too. Specifically, they shouldn’t have to pay to subsidize health care costs of people who choose to smoke. In fact, smokers hurt non-smokers by racking up health care expenses brought on by the hazards of their habit.
The folks behind Obamacare thought they’d figured out how to respect everyone’s rights, by giving healthcare insurance companies the ability to charge higher premiums – a surcharge – for smokers, up to 50% higher in some parts of the country. The idea is simple: smokers have the right to smoke, but not the right to pass on the increased cost of their health care to others.
The idea is also dead wrong. Higher insurance premiums price smokers out of insurance markets. When an uninsured smoker gets emergently sick, that means hospitals and clinicians don’t get reimbursed, which forces them to pass those costs on to people with insurance. When insurance companies price smokers out of their products, we all pay.
Fortunately, there’s a simple solution to the problem. To appreciate the solution, let me expand on the flaws in healthcare insurance surcharges.
(To read the rest of this article, please visit Forbes.)