Experience, Price, and the Brain:
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Experience, Price, and the Brain: What is an Ocean View worth? Scott Huettel Duke University
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21-Oct-2014 -
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It's been a while since I hit this topic, but it's about time we circled back to the awesome BLUEMiND2 conference that was held on the Outer Banks in early June.You can find more info about the conference in our Blue Mind blog category or on our webpage dedicated to the Blue Mind event, but for this post, I want to focus on a specific talk from the BM2 conference; "The Ocean View Premium."How much is the ocean view worth? And is it worth the added cost?As I discussed in a recent post about planning an Outer Banks vacation, we understand the trials and tribulations that go into organizing a vacation. It's a thankless task, but someone needs to do it. :) One of the largest challenges for the planners is choosing the house, and a difficult aspect of that choice is location.Should you go front row, oceanfront, or should you save a little money and be a little further from the beach?We can always walk to the beach, right? And the money we save can be used in other ways - food, equipment rentals, souvenirs...maybe even a great new IPad to bring with us! Is this the right trade-off?Oceanfront vacation rental homes can be expensive, but are they really worth the added costs? This was one of the questions we tried to tackle at the Blue Mind conference.We recruited Gordon Jones, local OBX resident and President of Coldwell Banker Seaside Realty for 22 years, and Dr. Scott Huettel, a Duke University neuroscience professor to, dissect the "Ocean View Premium" from a practical, real estate perspective and a scientific mind/reward perspective. The results are not unexpected, but also very fascinating.
Transcript of Experience, Price, and the Brain:
Experience, Price, and the Brain: What is an Ocean View worth?
Scott HuettelDuke University
Why do we value something?
How do we trade off between different things
we value?@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
An easy sort of value judgment (consumer goods)…
or
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
… a harder sort of value judgment (aesthetic experiences)…
or
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
… the hardest sort of value judgment (trading experience against goods).
or
Why do we value something?
How do we trade off between different things
we value?@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
Decisions involving tradeoffs between goods (e.g., money) and experiences
(e.g., a view) are difficult because they involve different value computations in
the brain.
Principle 1: We value information.
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
See Biederman & Vessel (2006, American Scientist)
We prefer images with intermediate complexity…
… recognizable elements…
… and positive associations.
Principle 2: We value memories.
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
Rostral Prefrontal Cortex
(prospection, planning)
Ventral Striatum (reward
evaluation)
FMRI activation to memory retrieval
(without incentives)
Han et al. (2010, Journal of Neuroscience)
Principle 3: Goods can (and should) be traded for experiences.
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
Trading Behavior
Bra
in
Resp
on
se
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
vmPFC
Smith et al. (2010, Journal of Neuroscience)
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
Rela
tive
Hap
pine
ss
Van Boven and Gilovich (2003)
Carter and Gilovich (2010)
Summary
@ BLUEMiND, OBX Scott Huettel, Duke University@ BLUEMiND, OBX Scott Huettel, Duke University
• Experiences carry value…• … by containing information. • … by generating memories.
• Experiences can be obtained/traded for goods…• … through a “common currency” for value.• … with positive long-term consequences.
