The Why of Buy

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"Stephen" is trying to win a casino bet. It's not a big one by any measure but a gamble all the same. Here's his play. The house is willing to give him $5 — risk free — just to fold. Or he can bet even odds on red and win $15. A blue ball packs him off empty-handed. Stephen swallows, forgoes the sure thing and bets red. A red gumball drops: he's $15 richer.

Stephen is not in Vegas. He's watching a video monitor in Paul Glimcher's neural-science lab at New York University. And his head is plugged into a high-powered Siemens functional magnetic resonance imaging scanner (fMRI). His name is not actually Stephen; he's a composite research subject. Glimcher is at the frontal lobe of an intriguing network of brain researchers and economists who are using advanced medical technology to try to figure out why people make the decisions they do — what brand of cereal, which mutual fund — and what part of the brain tells them to do so. "We're much further along with monkeys because we can use [implanted] electrodes and measure single neurons," Glimcher says. In experiments, computer data will tell him what a monkey is going to do seconds before the creature does it. Human see, monkey do.

Pioneer "neuroeconomists" around the country are ready to knock out the centuries-old model of Homo economicus, or "economic man," the perfectly reasonable, largely imaginary being who day in and day out maximizes his utility and gains and always clearly seeks the right thing to do. It's the foundation for Wall Street's "efficient market," which holds that every trade neatly reflects all available information. In theory, the saying goes, practice and theory are the same. But in practice, they are different.

The trouble with Homo economicus is that he has really very little to do with his emotional, dim-witted half brother Homo sapiens, who bought on a hunch. It's difficult to imagine Homo economicus upset and off to the mall for some "retail therapy." He doesn't make impulse buys. And he doesn't always know or care what he wants, let alone what he can afford. "The bursting of the Internet bubble may have been the final nail in the coffin of the efficient-market hypothesis," says Richard Thaler, a professor at the University of Chicago.

Research from fMRIs and other machines bears all this out. Gerald Zaltman, a professor at Harvard University, says 95% of consumer decision making occurs subconsciously. Read Montague, a professor at the Baylor College of Medicine, gave subjects the "Pepsi Challenge" in an fMRI scanner. Result: people found Pepsi more pleasing to the palate — their reward center lit up — but Coke's branding hit literally at the core of their sense of self, a much stronger bond. This affirms what we all suspected: brands are so powerful that we are sometimes more likely to buy something we identify with than something we like better or that is better for us.

The researchers are also finding that money makes us nutty. We should treat money as a mere exchange mechanism that allows us to get stuff. That distinction is lost on our brains. The dopamine release that makes a juicy hamburger so satisfying works the same magic even if we simply find the money to buy the burger.

There's not much profit yet in neuroeconomics' eyebrow-raising sidekick — neuromarketing — but that might not be far behind. In Atlanta, the BrightHouse Neurostrategies Group has been retained by Coca-Cola, Delta and Red Lobster for branding consultancy work.

Glimcher says while he can't peer inside a human's brain as he can a monkey's, "stuff like that is rapidly becoming possible." Certainly we'd torture ourselves much less over a potential impulse buy if we could just know in advance whether we were going to like it or not.