The postcards were not much of a gift—they cost pennies apiece. But they led to dramatically higher response rates. One postcard increased the response rate by 17 percent; four postcards raised the rate by 75 percent. According to Falk’s back-of-the-envelope calculation, the four-postcard solicitation improved the profitability of the direct-mail campaign by about 55 percent relative to the no-postcard solicitation (after accounting for the cost of the postcards themselves).
Other fund-raising experiments leveraging reciprocity have seen similarly impressive results. In a study conducted by Michael Sanders of the Behavioural Insights Team—Britain’s “Nudge Unit,” dedicated to using behavioral insights to improve government policy—investment bankers were asked to donate a day’s salary (roughly $750) to be split between two charities. Some were given a small packet of candy. The gift increased the likelihood of a full donation from 4.4 percent to roughly 11 percent—yielding a return on investment of more than 1,000 percent. (Like postcards, candy is cheap.) Clearly, even small gifts can have an outsize impact.
The prevalence and effectiveness of strategic gifts raise important questions for each of us as consumers, and for society at large: How can we protect ourselves from unwittingly falling prey to reciprocity? Should government regulators get more involved?
To some extent, regulators are already involved in reducing the use of gifts in the pharmaceutical industry. In 2003, the Department of Health and Human Services issued guidance about which industry marketing techniques violated federal anti-kickback laws. Recently, some states and even cities have imposed more stringent rules. Chicago, for example, has introduced a licensing system for pharmaceutical reps, aiming to mitigate “predatory marketing” of prescription drugs, with revenue from the licenses helping to fund opioid-addiction treatment.
When a company is making money from the opioid crisis
While targeted regulation is a positive step, it’s unlikely to solve the gift-giving problem entirely. It’s hard to imagine legislation banning the World Wildlife Fund from sending you your annual batch of return-address labels, for instance.
So we must be on guard against salespeople—and our own instincts. Although some reciprocity can be explained by a natural desire to foster relationships with the people we interact with in our daily lives, studies have shown that the impulse is more reflexive than pragmatic. Many people will reciprocate even in a onetime, completely anonymous transaction in which the gift giver and the recipient never learn each other’s identity.
The reciprocal pull may be impossible to overcome. But while the desire to give back may be strong, it is also often short-lived. Research has shown that the feeling can wear off quickly, which may explain why Purdue’s sales reps paid doctors so many visits.
This article appears in the January/February 2019 print edition with the headline “Did Free Pens Cause the Opioid Crisis?”