A behavioral-economic analysis of the essential value of brands

Recently, Hursh and Silberberg (2008) have advanced a behavior-economic approach to measure the value of reinforcers, in which demand elasticity is measured relative to the point at which price is zero, a technique that allows for comparisons across reinforcers that show different consumption patterns or across different dosages or magnitudes of the same reinforcer. The authors have proposed an exponential model in which the elasticity coefficient measures the essential value of reinforcers. The application of the exponential model in various experiments has shown that it provided a good fit to the data and supplied different theoretically consistent results. Considering that this previous research has either been experimentally based or has involved nonhuman participants, the present work examined the application of the model to the analysis of changes in consumption of brands with changes in prices, employing data from actual consumers buying brands of food products in grocery shopping, differing in the level of informational (i.e., socially mediated) and utilitarian (i.e., product mediated) reinforcement they offered. Purchase information concerning two products was obtained from a consumer panel, which included data related to purchases of more than 1600 consumers during 52 weeks. The model, calculated for different brands, fitted the data only moderately, but its parameters showed good reliability across stores. The essential value of brands showed significant increases with increases in brand informational reinforcement. The results indicate the reliability of the measure of essential value as its application is extended from the closed setting of the laboratory to the open settings of the marketplace and to symbolic secondary reinforcers.

Research highlights
► Extends the theory of essential value to human consumption.
► Uses behavioral economics in natural settings of economic choice.
► Emphasizes the nature of reinforcement rather than its rate of occurrence.
► Indicates the reliability of Hursh and Silberberg's measure of essential value.
► Relates essential value to secondary, highly symbolic reinforcers.