Products hijacking our reward systems
The best-performing sector in United States in the 20th century was consumer staples. And within consumer staples, tobacco and food & beverage stocks did particularly well. The second-best performing sector was healthcare, including pharmaceuticals. Why?
I am not sure, but I can find common denominators. Companies within these sectors sell products that are ingested orally. Their products contain substances that may have direct or indirect effects on our nervous systems. Third, some of these substances seem to be addictive.
I don’t need to convince you that addictive products can create fortunes for companies. Take Purdue Pharma for example, the producer of pain management medicine Oxycontin. The Sackler family has amassed a $14 billion fortune in just 25 years since setting up the business in its current form. Addictive substances tend to lead customers to repeat purchases. And it should be easy to raise prices, as long as the formula is secret, protected by patents or ingredients are limited in supply.
Which products have addictive properties? A 2007 study by Nutt et al found that nicotine was the third most addictive substance on earth after Heroine and Cocain. Alcohol was ranked as number six. So these drugs are clearly addictive. Given that most adults (myself included) consume caffeine, I think it is safe to say that products that containe caffeine are also more or less addictive.
A basic course in neurochemistry can tell us what other types of products may have addictive properties of the kind described above. Drugs tend to have a direct or indirect effects on neurotransmission. Information is passed through our nervous system by triggering the flow of neurotransmitters across synapses to adjacent neurons. Neurotransmitters help regulate motor functions, thought processes, arousal, our reward system, sleep, appetite, memory functions, learning, etc. There is no doubt that interfering with our bodies neurotransmitters have major effects on our the normal functioning of our bodies.
Drugs essentially hijack, or manipulate the system. Some drugs act by mimicking neurotransmitters by directly binding to receptors, others by blocking receptor uptake of neurotransmitters, or re-uptake after the process has taken place. Most of what we consider to be drugs are of the first kind – ie mimicking the function of normal neurotransmitters. Taking the neurotransmitter endorphine as an example, it normally helps the body alleviate the pain for a certain period of time so that we can get energy to escape from immediate danger. Drugs such as Oxycontin mimic the function of endorphine, flows through or body and binds directly to same opiate receptors. The effect is an alleviation of pain and a feeling of euphoria. Over time, large doses of a drug such as Oxycontin destroy our opiate receptors and make normal neurotransmission less effective. Stopping to use opiates leads to major withdrawal symptoms, making them highly addictive. Over the short run, use of such drugs causes remaining receptors to become more sensitive. This helps our bodies to function reasonably well despite the drug’s interference. But over time so few receptors are left that our bodies cease to function the way they had in the past.
Most drugs are not nearly as simple to analyse as opiates. They may affect different types of receptors, in direct or indirect ways. What we do know is that the key building blocks of a neurotransmitter are amino acids, or chains of amino acids called peptides. Chains of amino acids or peptides are called proteins and protein is what we get in our food every day. Eating normal protein won’t affect neurotransmission as protein is broken down into amino acids by the liver, used for cell reconstruction or energy. But some argue that heating of proteins through a process called the Maillard reaction can create peptides that fit into certain types of receptors, including in the acetylcholine system. Some also argue that the opioid properties in wheat products and dairy are strong enough to create dependency. That would explain why food companies insist on infusing wheat and milk protein in virtually every type of processed food.
Are we using products or are products using us?
I am not a neuroscientist and I have difficulty assessing what type and what quantity of neurotransmitters-like amino acids have the potential to create dependency. But if you understand natural selection, you have to agree that any substance that gives us feelings of wellbeing and creates dependency is likely to increase in usage over time. That includes not just drugs such as Oxycontin but also other substances with similar neurochemical properties. Regulators, or politicians are always a step behind. If they were truly rational about drug use, they would have outlawed nicotine and alcohol many decades ago. We cannot count on anyone protecting us from the consequences of consuming harmful products.
So natural selection can thus be seen as a constant fight between us and the products we use. In other words, a product is a type of meme that becomes more widespread the better it is able to hijack our reward systems. Yuval Noah Harari mentioned in his recent book Sapiens that “We did not domesticate wheat. Wheat domesticated us”. Whatever it was that attracted us to wheat (be it nutritional value, the ease of growing it or the potential effect it has on opiate receptors) it certainly won the evolutionary fight. Wheat now covers major portions of earth, thus becoming one of the most successful plants globally, from a genetic perspective. Wheat has even become more successful than human genes in replicating themselves.
You can extend this analogy to any product we use habitually – from Facebook, to Netflix, to cosmetics. They all hijacks our nervous system in one way or the other. Facebook helps us fulfill our desires for social interaction, triggering synthesis of the neurotransmitter oxytocine. Watching a drama on Netflix might trigger what is known as mirror neurons, which are thought to enable us to enjoy the same feelings as the protagonist is experiencing in the show. Whatever product has the deepest and strongest impact on our nervous system creates value in the eyes of the user. And just like a meme, the value added to the user enables the act of consumption to replicate itself and live on for many years.
The trigger for action is usually a void inside of us. Once we lose on the poker table in Vegas, we start craving for another gamble. Withdrawal symptoms from caffeine in the morning pushes us to go to Starbucks. A person ridiculing us makes us crave the feeling of dominance, a feeling associated with the neurotransmitter serotonine.
The yardstick by which every consumer product should be measured is therefore how well and timely it can create and fulfill emotional voids in customers, compared to the competition.
In my mind, selling drugs of the type I described above is likely to be more profitable than selling experiences that influence our bodies through sensatory impulses. That explains why tobacco stocks, alcohol and coffee-related stocks and perhaps even food products have been successful in creating value for shareholders. Regulatory action is an issue, but once a product becomes enjoyed in many parts of society it will be difficult to outlaw. It proved impossible to outlaw alcohol in many Western societies in the early 20th century. I believe it would be equally difficult to outlaw snuff in Norway and Sweden or Betelnut in Taiwan or Eastern India today. Other semi-addictive products such as casinos, video games, social media, etc may also create foundations for excellent businesses – as long as their platforms, network effects or economies of scale can fend off other companies trying to do the same thing.