Left-Digit Bias

[mickeyd]

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.

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

 

[ERD50]

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):

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)



-ERD50

 

[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

 

[Mulligan]

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.

 

[MexEcon]

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

 

[haha]

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