Derek Thompson over at The Atlantic wrote a great article titled “The 11 Ways That Consumers Are Hopeless at Math”. The 11 ways featured include:
- Getting something extra “for free” feels better than getting the same for less
- We’re heavily influenced by the first number
- We’re terrified of extremes
- We’re in love with stories
- We do what we’re told
- We let our emotions get the best of us
- We’re easily made dumber by alcohol, time, decisions
- We’re pained by transaction costs…
- … but we’re weird about rebates and warranties
- We’re obsessed with the number 9
- We’re compelled by a strong sense of fairness
While all of the points he makes are great (and you should definitely click over to read the full article) I wanted to point about a few of my favorites.
First off, consumers in love with stories sums up most shoppers. Think about it: whenever you get a great “deal” on a product or service, you tell the story to everyone. But was that “deal” even a deal in the first place? It is much easier to justify a purchase when it was on sale as opposed to full price. We feel good about ourselves saving money. But maybe we really didn’t save any money at all. Maybe the goal was to get us to buy the lower ticketed item all along. It is something to think about next time you are out shopping.
I also enjoyed reading about which is a better bargain, 33% more coffee or 33% off the price. I’ll admit, I’d have to think a bit for this one. In fact, too much time to actually pick the better option. When shopping in the grocery store, make sure you are comparing apples to apples. You can’t just look at the price tag and say that cereal A is cheaper than cereal B without knowing the amount of cereal you are buying.
You have to look at the unit price. This turns all items into a hard and fast unit. By looking at this number, which is usually at the bottom of the tag on the shelf, you will see which item truly is a better deal.
Lastly, a great point is made about warranties. Those store warranties are basically an insurance policy against an item. When looking back at your purchases, how many times has an item failed that you used or would have used the warranty for assuming you had it. The answer is probably very low. For me personally, I can’t think of a time. So why even bother purchasing the coverage. In most cases, you won’t get a brand new item. You’ll have to take the item back to the store so the store can ship it to get repaired. After two weeks or so, you’ll get your item back.
Readers, what do you think of this article?