Marketers trick math-challenged consumers with ploys on percentages


WSJ’s “The Numbers” columnist, Jo Craven McGinty, advised readers “To Shop Smart, Mind the Percentages” in this weekend’s issue. It turns out that, as I blogged back in 2007, percentages are puzzling to many people. Put yourself to this test from McGinty: You can buy a regular container of ice cream at 33% off (option 1) or pay the usual price for a 33% more of it as a free bonus (option 2). If you picked the first option without any hesitation, you go to the head of the class. Those of you—likely the majority of the general population–who went for option 2 are the target for the marketers.

“People always go for the bonus.” – Quote in WSJ from Akshay Rao, marketing professor, University of Minnesota and co-author of When Two and Two is Not Equal to Four: Errors in Processing Multiple Percentage Changes

The remainder who withheld judgement until they do the calculation get full credit for knowing that percentages require thinking to work out their effect. Kudos to you for being math-savvy.

“To be statistically literate, one must be able to form arithmetic comparisons of any two numbers.”

– Milo Schield, Department of Business, Accounting and MIS, Augsburg College, Minneapolis, “Common Errors In Forming Arithmetic Comparisons”, Sept 1999, Association of Public Data Users, Volume 1.51 Journal Of Significance

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