Crystal ball economics: What psychics can tell us about America's spending habits

I'm not sure whether I should feel guilty for not telling Jessica about the ulterior motives for my palm-reading visit. On the one hand, I probably should have said I was testing it out for a story. On the other hand, she's a psychic, so she should have intuited it.

She didn't, which meant that on a warm June afternoon I found myself seated across from her in a sweaty little basement space in lower Manhattan. For $25, which wound up being $30 because she didn't have change, Jessica told me my fortune. She said that I'm a kind person (true, I hope), that I'm standoffish (also true, unfortunately), and that I'm about to change jobs and move (no and no). She also said I'm afraid to express my creative side through activities like writing, which … well. Toward the end of the reading, Jessica saw something darker, a negative energy holding me back. She suggested I consider a cleansing. The cost: $500.

Many of you are likely rolling your eyes, but plenty of people are open to the idea of the paranormal. In a 2017 survey of American adults by the Pew Research Center, 41% of respondents said they believed in psychics, 42% said they thought spiritual energy could be located in physical things, and 29% said they believed in astrology. In a 2019 IPSOS survey, nearly half of respondents said they believed in ghosts. There's a line between believing in psychics and paying for them, but plenty of people do indeed pay, and even some big businesses are willing to shell out for a consultation. According to IBISWorld, the psychic-services industry in the US is worth $2.3 billion.

I took Jessica's card and told her I'd think about her proposition. I'm inclined to give her the benefit of the doubt that she trusts in her abilities, but even people I know who are into the psychic thing said this didn't sound legitimate, not like the "real" psychics they go to.

In her defense, Jessica (whose name I changed here because I didn't want to screw up her business) had her prices listed outside her shop, and upselling isn't a new phenomenon. It's a little mind-bending to think about how psychics go about setting prices — how they gauge fair costs for their services, decipher what customers will agree to, and use the opacity of the market to their advantage. It's not like there's some tarot price index or many materials that go into the work besides their supposed magical abilities. But for the most part, psychics rely on good old supply and demand, sprinkling in some extra tactics — mystical and not — to bring in profits. The $500 Jessica was asking for might seem worth it to a true believer. Had she gone lower, I might have said yes and paid $50 to get the devil off my back, just in case.

Psychic prices are all over the place. On Sanctuary, an app where you can find astrologists and mediums, many readings start at $5 for five minutes, but then some people charge $3 (or even $13 or $20) per additional minute. The shops you see in major cities may advertise a price of $10 or $25, but that's often just to get people in the door. Psychics and mediums haven't been immune to inflation either. Data provided to me by the online ticketing service Eventbrite indicates the average ticket price for psychic-related events in the US rose to $44 in 2023 from $39 in 2019.

I reached out to a couple of psychics to get a sense of how they approached pricing, and you may not be surprised to learn that the answer wasn't straightforward. Some of it is basic business principles, but a lot of it is pretty woo-woo.

"Many of us live eccentric lifestyles to be permitted to exist the way that we do safely with one foot on either side of the veil," said Blue June, a tarot reader based in New York, adding that they had to keep "regimented and sometimes unusual routines" to be accurate.

June said some of the parameters that determine price are quite mundane: experience and expertise, what nearby competitors charge, customer reviews, and overhead. But there are also some more mystic pieces to her pricing. She charges $55.55 to $155.55 for her services — a dream interpretation is her cheapest offer, while spellwork is the most expensive. (In numerology, 555 is an "angel number" that symbolizes change and transformation.)

"Clients should not approach the inquiry of service prices with a gifted psychic in the same way they approach their grocery bill," June said. "This is a luxury service at the end of the day, and it cannot be defined in the same way as any other shopping can."

Lisa Stardust, a New York-based astrologer, said she sometimes gives free readings to people if they're in pain or have a quick question — but like anyone, she has her limits. "The thing about being so empathetic and having all of this sensitivity to the world is a lot of people can take advantage of that," she said.

She charges $50 for one tarot question answered via email and $200 for a full astrological reading, though she says there's some wiggle room if people can't pay the full amount. She wants people to feel that they got their money's worth, she abides by a code of ethics, and this isn't her only stream of income. "I'm not pushing services on people that they don't deserve or need," she said.

There wouldn't be a supply of psychics out there charging money if there wasn't demand. Value ultimately comes down to how much someone is willing to pay. So why are people willing to pay for what's essentially a guess by a stranger?

Neil Dagnall and Ken Drinkwater, a pair of cognitive and parapsychological researchers at Manchester Metropolitan University, have spent years researching people's paranormal beliefs. They said one reason people engage with the paranormal is that they're searching for meaning. They want to resolve life's uncertainties, reaffirm their own beliefs, or gain a sense of closure.

"If people have got a bereavement and they go to a psychic, having some sort of contact, whether it's genuine or not, with somebody who's passed over actually is reassuring to people," Dagnall said.

"Maybe I'm skeptical, but I'm not a debunker, by the way," Drinkwater said. "I end up being compassionate about people's experiences and think that they're real to them."

Some psychics are able to charge what may seem like exorbitant prices because people make inferences about quality based on price. Whatever our motivations for going for a psychic — we think they'll get us in touch with the dead, or we're just doing it for kicks — we don't want the low-budget version. There are limits here, because once you get to $300, chances are you think it's real. But given a choice between a $1 reading or a $20 reading, a lot of people will spring for the $20 one because they figure it's better.

"If it's too cheap, people might assume that it's not good, that it actually isn't effective," said Jane Risen, a professor of behavioral science at the University of Chicago's Booth School of Business who has studied why people might want magical products even if they don't entirely think they work. "In some ways, putting the price on it, making people pay for it, can be part of why people think that it could work."

If you really believe what the psychic will tell you, of course you're going to pay for it. But not everyone who goes to a psychic buys into it. For those in the latter camp, it may come down to emotional management, Risen said. You're pretty sure the psychic won't predict the future or solve your problems, but she might make you feel less worried. Risen's research suggests that while getting a psychic's services doesn't make the bad thing less likely (obviously), it does make us less afraid of it.

"You could imagine purchasing partially for the emotional management of it and partially because you feel like, 'Well, I might as well be better safe than sorry,'" she said. It isn't that different from knocking on wood or drinking that shot of apple cider vinegar in the morning, even though you can't remember what sort of ailment it's supposed to be alleviating.

It should go without saying here that going to a psychic is often fun. Many people derive joy from having their fortunes told and toying with the possibility that what's said might be right. There's often a social element, too — people get their palms read with a group of friends. It's like when the lottery jackpot gets really high and everyone's buying tickets and fantasizing about what they'll do with their riches, even though they know they're not going to win.

There are countless stories about psychic hoaxes. In the early 2000s, the Federal Trade Commission dinged the TV psychic Miss Cleo, accusing her of engaging in deceptive advertising and billing practices. The faith healer Peter Popoff would send his wife and staffers to chat with audience members before his sessions and then pass the intel on to him. But something doesn't have to be a scam to be harmful or predatory.

Psychics have a lot of tools at their disposal to get more money out of people. They may inject a sense of urgency or scarcity, use a bait and switch, or hook you with a cheap service before upselling you. It's not that different from how a lot of businesses work, from car dealerships to e-commerce websites. On the one hand, if something feels good to someone, who is anyone to say it's bad? On the other hand, these practices can become detrimental when people allow them to dictate their important life decisions. "My psychic said" isn't a good reason to buy a stock or to end your marriage.

"If a person's buying into everything that person's telling them," Drinkwater said, "that's problematic."

He and Dagnall told me that most of the psychics they'd interviewed really believed they had abilities and only a handful admitted they didn't. Many are skeptical of other psychics; they don't want the fakes out there giving them a bad name.

Openness is generally a positive quality, but some people are a little too open, to the point they get taken advantage of, said Ralph Lewis, an associate professor in the psychiatry department at the University of Toronto who has an extracurricular interest in "weird" beliefs. "Some people are very open, and some people are not very open, but too much openness equals gullibility, credulity, suggestibility, and so on," he said. "You go too far, then as the skeptics like to say, don't be so open-minded that your brain falls out."

There are all sorts of biases that make people believe in psychics when they shouldn't. There's hindsight bias, where we see past events as more predictable than they were. There's also our tendency to conflate correlation and causation: I give Jessica $500 for the cleansing, I get a promotion at work, and there I am a month later handing over another $500 even though the cleansing had nothing to do with it.

"People are free to spend their money any way they choose, and we're never going to stop them from wasting money on implausible products," Lewis said. "But I do, on the other hand, think that it's not just benign to let people have their magical beliefs and lead them unchallenged."

Dagnall told me — while telling his coresearcher not to laugh — that at one point he started seeing a series of ones all over the place. He looked it up online, and supposedly it was his guardian angel telling him things were going to be fortuitous.

"Now, I know it's not true, but it's just interesting that I was noticing that number, and I wanted to sort of then say, OK, well, if I was into the paranormal, what significance would it have?" he said. "The paranormal is quite seductive in that way, in that it can offer explanations for odd, anomalous things."

His coresearcher did, indeed, laugh.

If it's not obvious by now, I am a psychic skeptic. I've spent a few hundred dollars on mystical stuff over the years at the behest of friends — a psychic fair here, a crystal there — and have almost always felt disappointed. So while reporting for this story, I talked to a friend of a friend named Katy who's really into all of this to try to understand her motivations.

Katy sees her shaman every month for $80. "I literally run my life through her," she told me. She does monthly therapy through a psychic for $105 a session. That psychic is also a pet psychic, which is not Katy's jam. For her horoscope, Katy has a favorite YouTuber who works on tips. She sometimes stops for tarot readings at her local farmer's market. She sees it all as self-care.

"For me, it's a part of my wellness routine," Katy said. "It just happens to be on my checklist."

Once, after an accident on her block in Chicago, Katy used a psychic to ensure the person had crossed over. Another time, she bought a bunch of bath oils in New York after a psychic told her she was cursed. She felt that only the latter episode was sketchy; I thought both were.

What's worth it, financially, for Katy would not be worth it for a lot of people. Once you get past necessities, that's true of a lot of things, whether it be a Birkin bag or Taylor Swift tickets or someone who says they can help you talk to your dead dad. We spend money on silly stuff all the time — just ask the NFT people. In a consumerist society, of course some people are willing to pay to commune with the afterlife. And in a capitalist society, of course some people are willing to take their money.

Despite my qualms, the day after I met with Jessica, I texted her to ask what the cleansing entailed. She told me it was "research meditation" to look into my past, present, and future in order to heal my mind, body, and soul. I asked if there were options if I didn't have the $500 she wanted, and she didn't budge. Apparently, Jessica drives a hard bargain.

Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.