We are constantly evaluating numbers, whether in personal finance or other areas of life, but often the number's value is overshadowed by associations that number may have in your mind, or even the sound it makes when you say it out loud.
Photo by Anniehp.
Daniel Gilbert at the New York Times explains that numbers mean a lot more to us than just their intrinsic value. We're given seven-day courses of antibiotics even though science does not dictate seven days as necessary, while stocks closing at numbers divisible by 10 significantly outperform those not. Even the sound a number makes when you say it out loud can have an effect on you:
The sound a number makes can influence our decisions about it. In a recent study, one group was shown an ad for an ice-cream scoop that was priced at $US7.66, while another was shown an ad for a $US7.22 scoop. The lower price is the better deal, of course, but the higher price (with its silky s's) makes a smaller sound than the lower price (with its rattling t's).
And because small sounds usually name small things, shoppers who were offered the scoop at the higher but whispery price of $US7.66 were more likely to buy it than those offered the noisier price of $US7.22 - but only if they'd been asked to say the price aloud.
Just like you assign more value to an object that you've touched, you may assign higher values to certain numbers, even if those numbers are lower than the ones their alternatives in a practical situation. Next time you're given a statistic, price point, or other numerical decision, consider the choice you make and why you're making it — and just remember that a number that sounds big does not equal a number that is big. Hit the link to read more.
Magic by Numbers [The New York Times]