By Regina Stracqualursi
Imagine you’re pumping gas when the gas pump stops, leaving your total cost at $29.87. Some people would be tempted to squeeze the gas pump one last time to try to get the cost to $30. Or say you went out for dinner with a friend and the total bill came to $47.80. You may want to leave a 20% tip ($9.56), but end up leaving $10 instead.
The truth is, as humans, we make illogical decisions surrounding numbers every day. A recent study published in Organizational Behavior and Human Decision Process revealed that we have an irrational preference for round numbers — even when the non-round numbers are more beneficial or represent a more positive outcome.
In the study, Gaurav Jain, assistant professor of marketing in the Lally School of Management at Rensselaer Polytechnic Institute, and his co-authors, Gary J. Gaeth and Dhananjay Nayakankuppam, explored attribute framing, a cognitive bias where people make decisions based on the way information is presented. In the past, attribute framing research has focused mainly on the words describing or explaining a number (i.e., “98% fat-free”). In this study, however, the researchers focused on how people make decisions based on the numbers themselves.
“I’m always interested in that question — why do people behave the way that they do?” said Jain. Analyzing data collected from over 1,500 participants, the team set out to try to understand just that and found that people have biases about numbers. Specifically, people tend to prefer round numbers and find non-round numbers jarring.
“Round numbers are familiar, whereas we have to process non-round numbers,” said Jain. Therefore, when people see non-round numbers, they tend to think more critically about the number itself and compare it to the number they would like to see ideally.
For example, say you owned a weight loss business and were trying to increase subscriptions to your services. In this case, you’d be better off saying “90% of customers saw results in just one month” instead of “93.45% of customers.” If you said “93.45% of customers,” prospective customers would be more likely to analyze that number and compare it to the ideal of 100%.
“Generally, we think that numbers are used for quantitative information, but how many of us know that numbers actually have a language of their own?” asked Jain. “What my research does is provide a tool and that tool can be used in various industries.”