Question of the Day: Which offer would make you more likely to buy a $50 pair of jeans: $10 off or 20% discount?

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Sep 23, 2020
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Question of the Day, Behavioral Finance

Answer: 20% discount 

Questions: 

  1. How do most retailers choose to reduce the cost of items: dollars saved or percentage discount? 
  2. For the example given with this question, which of the two offers for the $50 jeans, $10 off or 20% discount, yields the largest amount of savings?
  3. Why do you think consumers are driven to the biggest number? 

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (Visual Capitalist infographic on 29 Psychological Tricks To Make You Buy More)

Ever suffered from buyer’s remorse? You’re not alone. According to a recent survey, only 5% of people have never felt guilty about buying something. That means the majority of us, at some point in our lives, have regretted a purchase. But consumers aren’t necessarily only to blame for impulse buys. After all, we’re constantly bombarded with advertisements and marketing tactics specifically tailored to try and get us to spend more money.

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Looking for more behavioral finance? We have a mini-unit on it

 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.