You're Probably Wrong About How Risky Your Prescriptions Areby
Research briefs, a regular series, looks at business-related studies emerging from academia. This week: Maybe read your prescription bottles a little more carefully.
Study: Value Atrophy in Consumer Assessment of Risky Options
Authors: Uzma Khan, professor of marketing at Stanford’s Graduate School of Business, and Daniella Kupor, graduate student at Stanford Graduate School of Business
Published: Unpublished, under review at the journal Management Science, presented at the Behavioral Decision Research in Management conference in July.
One drug may increase your chances of getting cancer. The other could increase the odds of cancer as well as the likelihood you’ll experience asthma, dizziness, and insomnia. Which is more dangerous?
Logically, the second medication is riskier, but if you are like most American consumers, you won’t see it that way. That’s the upshot the new study, which suggests that people may put their health in danger by misjudging the risks of medical treatments. Patients see a catastrophic outcome as less likely when its risk is listed alongside more benign afflictions.
“Consumers may unwittingly expose themselves to substantial danger,” write the authors. “Patients may be more likely to take medical drugs with potentially harmful side effects if they learn about the drug’s relatively minor side effects along with the drug’s more serious ones.”
In two separate experiments involving a total of 411 participants, researchers asked people to imagine a drug developed to treat hypertension that increased the likelihood of cancer alone and then imagine it increased the likelihood of cancer and other minor illnesses. People tended to rate the drug as less risky and said they’d be more likely to take it when it had milder side effects in addition to cancer.
That irrationality may also affect the way people make financial choices. The researchers note that people might be more amenable to investing in risky assets “if relatively minor dangers of such investments are noted in addition to more major risks.” By the same logic, they might be less likely to buy homeowners insurance if providers “describe the minor damages that can befall homeowners in addition to the serious setbacks that can occur.”
The takeaway for marketers is to stop sweating the small stuff and stress just one major impact of your product. The lesson for all humans is to be better at math when making decisions.