Category: 

What Is an Experience Good?

Article Details
  • Written By: Alex Newth
  • Edited By: Angela B.
  • Last Modified Date: 24 September 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
In late 19th-century London, mail was delivered to residential addresses up to twelve times each day.   more...

September 28 ,  1924 :  Two US military planes complete the first flights around the world.  more...

An experience good in economics refers to a product for which the consumer does not initially know the quality and value of the item, aside from the price tag. The good is usually a product such as a book or movie, and the value is discovered after consumption. A variant of experience good is a post-experience good, where the value is not entirely known even after consumption. A search good, in contrast, is a product such as a tool or plane ticket, for which the consumer knows the quality and value before consuming.

Of the many product types, an experience good is one for which the consumer does not know the value of the product before it is bought and used. These items are usually purchased for entertainment or as an impulse buy, and the buyer can only guess at the real value of the item before it is used. After using or experiencing the good, the consumer will know the true value of the item.

For example, a book is an experience good. There can be a shelf of books, all the same price, but the consumer does not know which ones are good and which are bad. After reading the book, the consumer should know if the book was worth the money.

Ad

Some variables can lead to an estimate of value before purchasing an experience good. If the consumer likes or knows the author, has skimmed through the pages, has read online reviews and has talked to friends about the book, then he or she may have an idea of its value. These variables help the consumer estimate, but he or she still will not know the true value until the product is consumed.

Post-experience goods go further than experience goods. With these products, the consumer does not know the true value of the item even after experiencing the good. Vitamins fit this description. Even after consumption, most consumers will not know whether vitamins are fulfilling their intended purpose.

In contrast to experience good products are search goods. These goods have a known value before they are purchased. For example, if someone buys a hammer, he or she knows what the hammer will be used for and how useful it will be. There are some variables that may increase or reduce this value, such as quality, material and color, but these variables are usually known before purchasing and consuming the product.

Ad

You might also Like

Recommended

Discuss this Article

B707
Post 7

Surprise! I've never really thought about the sale of goods in this way before. It makes sense, though. Before I buy a book, I always ask friends, read reviews, and read the book jacket to find out the chances of it being a good book.

I'm trying to think of some more examples of experience goods. I suppose that restaurant meals would be experience goods as far as quality and taste. But you could get a glimpse of the presentation if another customer was served the same meal before you.

Cosmetics might be an experience good if you aren't able to sample the product beforehand. Even trying a sample wouldn't tell you everything about the product. For me, cosmetics are the one product that I often have "buyer's remorse."

Saraq90
Post 6

@starrynight - Your comment about buying the experience good of books and just using the library for such books that you are unsure of, made me think of an interesting fact I just learned. You can borrow e-books on your e-book reader from the library (a.k.a. for free!).

Anyway, I think that I love experience goods and I think that beer for me is an experience good because I like to try different ones. So because I do not know what it tastes like and if I will like it then I do not know its quality or value except of course the price tag.

Anyone else do this with goods that could be just a search good (for

example one would know the quality and value of the beer they always buy) and then turn the same type of good into an experience good?

I guess I may be stretching the meaning of an experience good, but that is probably just the speech-language pathologist in me (we think about the ins and outs of language most of the day at my job).

ceilingcat
Post 5

@starrynight - Good point about getting books from the library. If they end up not being good, all you've wasted is your time, not your money.

Anyway, what struck me most about this article was the part about vitamins being post-experience goods. I take vitamins, and I do think that I can tell a difference in my health when I take them. However, I guess I don't really know for sure!

When you break it down that way, it actually seems kind of silly to buy vitamins!

starrynight
Post 4

I'm an avid reader, so I guess I have a lot of experience with experience goods. Truthfully, I've never thought about the difference between buying a book and say, a beer. But I suppose there is a difference.

Still, I think that's actually part of the fun. I enjoy the mystery that a new book holds. Will it be good? Will it be my new favorite? Am I about to discover an awesome new author?

I've found that over the years, I've perfected my book buying to the point where I don't pick too many duds. But also, if I'm not sure about something I can get it from the library first. Then if I like it, I can buy it. Although I suppose a book that you've already read is no longer an experience good!

SteamLouis
Post 3

I wonder if the type of good- experience or search- is very important for manufacturers?

I'm sure it makes a difference for them since it will affect their sales and profits. Do you know which type of good is more profitable, experience or search?

Or are there too many other factors involved to really say?

burcidi
Post 2

I agree that reading product reviews or knowing a brand, and even product return and refund policies help relieve some of the worries associated with buying an experience good. But I still think that when it comes to these goods, you never really know what you're going to get. The only option is to purchase it and give it a try. It's a risk to take because you could end up hating it or not find it useful, but you could end up loving it too.

I'm a huge movie fan and I love buying and collecting DVDs of movies I like. But I don't always watch the film before I buy it. I generally just read the synopsis

or see which actors are in the film and decide to buy it and see it. Yes, there have been times where I ended up not enjoying a film or two. But there have also been times when I read a bad review about a movie and still bought it and ended up loving it.

So when it comes to experience goods like movies, music and books, it has a lot to do with personal taste. That's why I don't take reviews too seriously. I buy it and decide the value of it myself.

And even if I don't like a product after buying, it's not such a big shock. I think we Americans do so much shopping that we have gotten used to this. I realize I waste some of my money shopping for experience goods, but doesn't everyone?

bear78
Post 1

This makes a lot of sense. I had never thought about these terms and their meanings before. But after reading this article, I realize that whether a good is an experience good, post-experience good or search good, determines whether or not I buy the product and how much I think before I purchase it.

When I need a search good, something essential like bread or dental floss, I don't think about it at all, I buy it right away. But if I'm going to buy an experience good or a post-experience good, I think a lot because there is a chance that I could be disappointed and regret buying.

Post your comments

exception 'Exception' with message 'error writing captcha: Duplicate entry '2147483647' for key 'PRIMARY'' in /ssd/www/wisegeek/public_html/_core/classes/public/Captcha.php:44
Stack trace:
#0 /ssd/www/wisegeek/public_html/_core/controls/public/ControlDiscussionPostBox.php(324): Captcha->createCaptcha()
#1 /ssd/www/wisegeek/public_html/framework/classes/Control.php(104): ControlDiscussionPostBox->preRender(false)
#2 /ssd/www/wisegeek/public_html/framework/classes/Control.php(149): Control->render()
#3 /ssd/www/wisegeek/public_html/tpl/default-nocustom-lu/pages/public/article/article.htm(526): Control->__toString()
#4 /ssd/www/wisegeek/public_html/framework/classes/Control.php(300): require('/ssd/www/wisege...')
#5 /ssd/www/wisegeek/public_html/framework/classes/Control.php(309): Control->requireTpl('pages/public/ar...', Object(PageArticleCom), true)
#6 /ssd/www/wisegeek/public_html/framework/classes/Control.php(131): Control->renderTpl('pages/public/ar...', Object(PageArticleCom))
#7 /ssd/www/wisegeek/public_html/framework/classes/FormDataControl.php(87): Control->renderTemplate()
#8 /ssd/www/wisegeek/public_html/framework/classes/Control.php(109): FormDataControl->renderTemplate()
#9 /ssd/www/wisegeek/public_html/framework/classes/ScriptPage.php(50): Control->render(false)
#10 /ssd/www/wisegeek/public_html/framework/classes/Control.php(149): ScriptPage->render()
#11 /ssd/www/wisegeek/public_html/framework/classes/Page.php(97): Control->__toString()
#12 /ssd/www/wisegeek/public_html/_core/classes/public/PublicFrontController.php(443): Page->processRequest()
#13 /ssd/www/wisegeek/public_html/_core/classes/public/PublicFrontController.php(7): PublicFrontController->renderPage()
#14 /ssd/www/wisegeek/public_html/index.php(11): PublicFrontController::run()
#15 {main}