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Left-Digit Bias
Old 06-02-2011, 06:35 PM   #1
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Left-Digit Bias

Didn't know that it had a name, but I have always discounted this effect even though I have seen it used many, many times. Guess I'm wrong.
Quote:
In one study, researchers offered people a choice between two different pens.
When the pens were priced at at $2.00 and $3.99, nearly half of the people chose the more expensive pen.
But when the prices changed by a single penny, to $1.99 and $4.00, fewer than 20 percent of people chose the more expensive pen.
Social scientists call this the "left-digit bias" peoples' tendency to place too much weight on the leftmost digit of a number.
This Blog Post Costs $3.99 : Planet Money : NPR
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Old 06-02-2011, 07:42 PM   #2
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I haven't read the study yet, but that quote has it's own interesting (to me) subtle bias in it:

nearly half of the people chose the more expensive pen.

followed by:

fewer than 20 percent... ...

I think it would be better said as (emph on changes):

Quote:
In one study, researchers offered people a choice between two different pens.
When the pens were priced at at $2.00 and $3.99, fewer than 50% of the people chose the more expensive pen.

But when the prices changed by a single penny, to $1.99 and $4.00, fewer than 20 percent of people chose the more expensive pen.
Why change from "nearly half" to "fewer than 20%"? Isn't "nearly half" also "fewer than 50%"? Although it's obvious that "half" is the same as "50%", it bugs me when writers change terms midstream. That's fine for literary works to provide interest, but when presenting data, keep the terms the same. I think the "nearly" half" provides a subtle bias of making the first group seem even larger than it is, relative to the group described as "fewer than X%".

Is there a name for that kind of bias?

edit/add: Further, the study is flawed if they were looking for left digit bias, as the relative value changed (albeit by a small amount). And even though they say they changed by a single penny, the difference is two pennies, and the difference is what matters. A better study would be:

$2.49 and $3.59 pens (a $1.10 difference, and a left digit difference of 1)

versus

$2.99 and $4.09 pens (a $1.10 difference, but a left digit difference of 2)



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Old 06-02-2011, 09:22 PM   #3
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This is probably why the penny will never go away.

I'm much rather pay for gas at $4.99 a gallon that at $5 a gallon
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Old 06-03-2011, 01:59 PM   #4
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Quote:
Originally Posted by easysurfer
This is probably why the penny will never go away.

I'm much rather pay for gas at $4.99 a gallon that at $5 a gallon
In my area they would sell it $4.99 and 9/10 cents. I guess that 9/10's of a cent meant more in the 70's but they still do it here.
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Lots of (fun/interesting) related research about it
Old 06-06-2011, 05:14 PM   #5
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Lots of (fun/interesting) related research about it

There many lab experiments (I could post a list later if interested) but also field evidence on this:
-Heuristic Thinking and Limited Attention in the Car Market
-Left-digit bias and inattention in retail purchases: Evidence from a field experiment
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Old 06-06-2011, 07:16 PM   #6
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Quote:
Originally Posted by MexEcon View Post
There many lab experiments (I could post a list later if interested) but also field evidence on this:
-Heuristic Thinking and Limited Attention in the Car Market
-Left-digit bias and inattention in retail purchases: Evidence from a field experiment
I'm interested. Post whatever you have.

Ha
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