Updates from Chicago Booth

The secrets of shopping
By Amy Merrick – A woman suffering from a headache walks into a drugstore. She faces a shelf of remedies: mostly bottles of branded aspirin, such as Bayer. Next to those colorful, heavily advertised boxes are store-brand packages of generic aspirin. The woman puts the generic into her basket and goes home.

A quartet of researchers find that she’s not alone, as sophisticated shoppers—such as doctors or pharmacists, the people most likely to know whether the extra few dollars spent on a brand are worth it—opt to buy generic headache drugs more often.

In fact, a doctor or pharmacist is 18 percentage points more likely than the typical shopper to buy a private-label headache remedy. The magnitude of the difference surprised one of the researchers, Matthew Gentzkow, Richard O. Ryan Professor of Economics and Neubauer Family Faculty Fellow at Chicago Booth.

“The effects are really big across a lot of health-care categories,” Gentzkow says. The researchers estimate that if all US consumers were to start shopping like pharmacists, they could save a collective $410 million a year on headache remedies. more>

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