Headache Remedies In Three Charts

A blog about business and economics.
June 21 2013 4:54 PM

Three Charts That Will Confirm Everything You Already Believe About Headache Remedies  

Pills pills pills!


Jesse Shapiro, Matthew Gentzkow, Jean-Pierre Dubé, and Bart J. Bronneberg have an amazingly comprehensive paper (PDF) on the question of who buys Advil/Tylenol pills when you could buy cheaper generic ibuprofen/acetaminophen (or, as they say in Europe, "paracetamol") pills.

Somewhat unfortunately, the answers are not that surprising. For example, poor people are thrifty and rich people waste money:


Conversely, people who can correctly identify the active ingredients in name brand pills are less likely to waste money:


And better-educated people make more-informed decisions, though this is somewhat undercut by the fact that better-educated people have more money:


This isn't exactly earth-shattering stuff, but it's an important real world illustration of the fact that not only to actual product markets lack perfect information but this makes a real difference. It seems like the name-brand headache remedy industry shouldn't exist, and it seems that if people were better-informed it wouldn't exist. Sales of branded Advil are based on a mixture of people not knowing what the ingredients are and not bothering to check the prices.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



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