Posts Tagged psychology
Marketers trick math-challenged consumers with ploys on percentages
Posted by mark in Consumer behavior on August 5, 2018
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
If you finish reading this headline, your attention span beats a goldfish
Jo Craven McGinty in her column The Numbers in today’s Wall Street Journal, debunks this report by Statistic Brain that our attention span has eroded to below that of a goldfish, presumably due to so many distractions nowadays.
My feeling is that the average person truly can only concentrate on one thing for 8 seconds. Where Statistics Brain goes wrong is by overestimating the attention span of a goldfish. I put my pet Pancho (pictured) to the test with a very attractive lure. He came nowhere near 9 seconds of focus, despite me yelling “pay attention!” repeatedly. In fact, he never stopped long enough for me to get a good photo—notice how it’s out of focus.
OK, hold on, I’m getting a text message…
Who foresees the future better—the Hedgehog or the Fox?
Posted by mark in pop, Uncategorized on June 5, 2013
“The fox knows many things, but the hedgehog knows one big thing.”
– Archilochus
In the June 3rd issue of Chemical & Engineering News Frederick M. Peterson, a chemical engineer who went on to achieve a doctorate in economics, dissects what happens when “Scientists Tackle Finance.” He warns against the tendency of experts in one field being overly bullish about their ability to manage things outside of their specialty. These are the hedgehogs—people who make bold predictions and happen to be right long enough that they attract a strong following.
On the other hand, the foxes, who observe many things and adapt readily to differing situations, lack confidence about the chances of any particular path leading to success. They are seen as being weak and wish-washy, which is not very popular. Nevertheless, it may not be surprising that foxes do better than hedgehogs at forecasting, according to Peterson, who cites a seminal study by the School of Business at University of California, Berkeley.
The moral of this story is to be wary of anyone who expresses too much certainty about the shape of things to come. It does not pay to follow hedgehogs—they will ultimately go beyond their narrow limits of competence and roll into something very prickly.