Would plain packets make cigarettes less attractive?

Er...

How does increasingly plainer cigarette packaging influence adult smokers’ perceptions about brand image? An experimental study

M A Wakefield, D Germain, S J Durkin

9 July 2008

Method: A 3 (brand types) × 4 (degree of plain packaging) between-subject experimental design was used, using an internet online method, to expose 813 adult Australian smokers to one randomly selected cigarette pack, after which respondents completed ratings of the pack.

Results: Compared with current cigarette packs with full branding, cigarette packs that displayed progressively fewer branding design elements were perceived increasingly unfavourably in terms of smokers’ appraisals of the packs, the smokers who might smoke such packs, and the inferred experience of smoking a cigarette from these packs. For example, cardboard brown packs with the number of enclosed cigarettes displayed on the front of the pack and featuring only the brand name in small standard font at the bottom of the pack face were rated as significantly less attractive and popular than original branded packs. Smokers of these plain packs were rated as significantly less trendy/stylish, less sociable/outgoing and less mature than smokers of the original pack. Compared with original packs, smokers inferred that cigarettes from these plain packs would be less rich in tobacco, less satisfying and of lower quality tobacco.


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Sunday dollars+sense: Too much testosterone

Wondering what there’s too much of in your share portfolio? It could be testosterone.

When the share market was climbing, testosterone was thought of as a good thing. A Cambridge University study just published has found that during the upswing the more testosterone in a (male) share trader’s saliva in the morning, the more money he had made by the end of the day.

The author, John Coates - himself a former trader - believes that as the share market climbed last year increasing amounts of testosterone were pumped into the traders’ bloodstreams, making them increasingly confident and increasingly likely to take risks - pushing up the market even further.

Until it collapsed...

Coates says that then an associated steroid named cortisol took hold. It made traders jumpy, messed with their memories and see danger where it wasn’t. It exaggerated the downturn.

“In the present crisis, traders exposed for months now to the noxious effects of cortisol may end up in a psychological state known as learnt helplessness,” Coates writes.

They would have functioned better if they had been women.

Terry Odean and Brad Barber at the University of California have been studying the difference between men’s and women’s trading behaviour for 15 years.

They find that men are far more likely than women to impulsively trade rather than simply hold, especially single men. Unmarried men (presumably with raging hormones) are about two thirds more twitchy - two thirds more likely to buy and sell than unmarried women.

It’s a bad strategy. When Odean and Barber examined the accounts of 66,400 traders over a period of six years they found that the women, who traded the least, made 1.4 per cent more than did the men.

More strikingly, the single women made 2.3 per cent more than did the single men.

If you are surprised about that, Odean and Barber can understand.

They say men are more sure of their ability: it’s why they make stupid decisions. Women are less sure - that’s why they are less likely to do things that are rash.

So, if your investment advisor is a male, should you change him?

Perhaps. But don’t take it too far.

In New York a former trader named Andrew Tong is suing his employer SAC Capital for allegedly directing him to take female hormones as a way of making his trading “less aggressive”.

It’s not clear why they would have bothered. They could have just hired a woman.


John M. Coates and J. Herbert, Endogenous steroids and financial risk taking on a London trading floor, PNAS, Apr. 22, 2008.

Brad Barber,Terrance Odean, Boys will be Boys: Gender, Overconfidence, and Common Stock Investment, Quarterly Journal of Economics, February 2001, Vol. 116, No. 1, 261-292.

HT: Zubin Jelveh

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Sunday dollars+sense: Are successful investors not quite the full quid?

What’s the secret of investment success? Part of it could be brain damage. Most of us are notoriously and unreasonably cautious when it comes to taking risks.

Try this: Toss a coin. If it comes up heads, I’ll give you $250. If it doesn’t, you will have to pay me $100. Not prepared to take me on? You should. The odds favour you.

Perhaps that’s because there is too much money at stake. What about a series of smaller bets? What if I give you 20 one-dollar coins. If you want to you can toss each one of them. I’ll turn it into $2.50 each time it comes up heads, and you will lose if it comes up tails.

Researchers from Stanford University have found that around 80 per cent of people accept the bet at least once, but only 50 per cent accept it on all of the time. Which is odd, because accepting the risk all of the time is the best way of making money.

Then researcher Baba Shiv and his colleagues played a hunch...

They performed the same test on a group of Americans who had suffered a stroke or survived brain surgery. All had a damaged prefrontal cortex, the part of the brain that processes emotions.

The brain-damaged Americans turned out to be much better investors than the Americans with their brains intact. Given the same $20 each and the same 20 chances to accept the attractive bet, 83 per cent of them accepted all the time. They made more money than did the Americans with the emotional part of their brains intact.

When the study was published in the Journal of Psychological Science in 2005 one newspaper headline asked: "Are successful investors emotionally brain damaged?" Another declared: "Psychos best investors".

But being fearless isn’t always the best way to make money. As it happened several of the brain-damaged volunteers in the study were bankrupt. Being wary is good for us much of the time because it prevents us being taken advantage of. The important finding is that people with normal brains tend to be wary even when they shouldn’t be.

One secret of investment success might be to outsource your investment decisions to someone who isn’t wary. Superannuation fund managers take large but well-calculated risks all the time. They do it without emotional attachment, because it is not their money.

Investment Behavior and the Negative Side of Emotion
Shiv, Baba; Loewenstein, George; Bechara, Antoine; Damasio, Hanna; Damasio, Antonio R.
Psychological Science, Volume 16, Number 6, June 2005, pp. 435-439

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