Happy smokers pay more for cigs; connection to the well-known fact that nobody can eat just part of a candy bar

This article by Tim Harford reminds me of an example I used to give in my decision analysis class:

When I was younger, people used to complain about candy bars getting smaller and smaller. (For example, Stephen Jay Gould has a graph in one of his books showing the size of the standard Hershey bar declining from 2 ounces in 1965 gradually down to 1.2 ounces in 1980, and for that matter I can recall tunafish cans gradually declining from 8 ounces to 6 ounces.) And I remember going to the candy machine with my quarter and picking out the candy bar that was heaviest–I don’t remember which one–even if it wasn’t my favorite flavor, to get the most value for the money.

But now I realize that, rationally, candymakers should charge more for smaller candy bars. The joy from eating the candy is basically discrete–I’ll get essentially no more joy from a 1.7-ounce bar than from a 1.4-ounce bar. But the larger bar will be worse for my health (no big deal if I eat just one, but with some cumulative effect if I eat one every day, similarly with the sodas and so forth). And, given the well-known fact that nobody can eat just part of a candy bar, I get more net utility from the small bar, thus they should charge more.

See here for a link to a research study on this.

2 thoughts on “Happy smokers pay more for cigs; connection to the well-known fact that nobody can eat just part of a candy bar

  1. Plus when resolving cognitive dissonance people often decide they like more expensive items better; thus you will tend to be happier with a more expensive candy bar, especially if it is smaller.

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