Skip to main content
SpringerLink
Log in

The interaction between frames and numeracy in the evaluation of price reductions

  • Published:
Economia Politica Aims and scope Submit manuscript

Abstract

In this study we examine two factors which strongly influence the perception of the value of a discount: its presentation format and numeracy (the ability to use and attach meaning to numbers). We described a product on sale with two presentation formats (money-off, e.g. 11€ less and percentage, e.g. 36% less) and we compared the preferences for these formats, presented jointly and separately. The experimental results indicate that the consumers consider the percentage format more attractive than money-off format, but when they are presented jointly the attractiveness of the percentage format decreases, reaching the level of the money-off format. This effect is modulated by the numeric ability of the consumers: the preferences of the highly numerate consumers are not modified by the presentation formats. On the contrary, low numerate consumers are highly attracted by the percentage format but they change radically their preferences once the percentage discount is presented with the money-off format, which indicates the actual amount of saved money. These results indicate that a class of consumers—those with low numeracy—is particularly vulnerable to messages presented with certain specific forms. However, at the same time, it is possible to mitigate this effect by providing pieces of information which can compensate the excessive attractiveness of the percentage format.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

Notes

  1. The participants with very low levels of numeracy were few in numbers, so for this graph we created a group that includes the decisions of the participants with numeracy scores from 0 to 3.

References

  • Chen, S. F. S., Monroe, K. B., & Lou, Y. C. (1998). The effects of framing price promotion messages on consumers’ perceptions and purchase intentions. Journal of Retailing, 74(3), 353–372.

    Article  Google Scholar 

  • Del Vecchio, D., Krishnan, H. S., & Smith, D. C. (2007). Cents or percent? The effects of promotion framing on price expectations and choice. Journal of Marketing, 71(3), 158–170.

    Article  Google Scholar 

  • Della Bitta, A. J., Monroe, K. B., & McGinnis, J. M. (1981). Consumer perceptions of comparative price advertisements. Journal of Marketing Research, 18(4), 416–427.

    Article  Google Scholar 

  • Dickert, S., Kleber, J., Peters, E., & Slovic, P. (2011). Numeracy as a precursor to pro-social behavior: The impact of numeracy and presentation format on the cognitive mechanisms underlying donation decisions. Judgment and Decision Making, 6(7), 638–650.

    Google Scholar 

  • Estelami, H. (2003). The effect of price presentation tactics on consumer evaluation effort of multi-dimensional prices. Journal of Marketing Theory and Practice, 11(2), 1–16.

    Article  Google Scholar 

  • Finucane, M. L., Peters, E., & Slovic, P. (2003). Judgment and decision making: The dance of affect and reason. In S. L. Schneider & J. Shanteau (Eds.), Emerging Perspectives on Judgment and Decision Research (pp. 327–364). New York: Cambridge University Press.

    Chapter  Google Scholar 

  • Frederick, S. (2005). Cognitive reflection and decision making. Journal of Economic Perspectives, 19(4), 25–42. doi:10.1257/089533005775196732.

    Article  Google Scholar 

  • Graffeo, M., & Bonini, N. (2015). On the evaluation of savings: The role of numeracy. Neuropsychological Trends, 17, 31–35. doi:10.7358/neur-2015-017-graf.

    Article  Google Scholar 

  • Graffeo, M., Polonio, L., & Bonini, N. (2015). Individual differences in competent consumer choice: the role of cognitive reflection and numeracy skills. Frontiers in Psychology. doi:10.3389/fpsyg.2015.00844.

    Google Scholar 

  • Greene, J., & Peters, E. (2009). Medicaid consumers and informed decision making. Health Care Financing Review, 30(3), 25–40.

    Google Scholar 

  • Hardesty, D. M., & Bearden, W. O. (2003). Consumer evaluations of different promotion types and price presentations: The moderating role of promotional benefit level. Journal of Retailing, 79(1), 17–25.

    Article  Google Scholar 

  • Hibbard, J. H., Peters, E., Dixon, A., & Tusler, M. (2007). Consumer competencies and the use of comparative quality information: it isn’t just about literacy. Medical Care Research and Review, 64(4), 379–394.

    Article  Google Scholar 

  • Hosmer, D. W., & Lemeshow, S. (2000). Applied Logistic Regression. New York: Wiley.

    Book  Google Scholar 

  • Hsee, C. K. (1996). The evaluability hypothesis: An explanation for preference reversals between joint and separate evaluations of alternatives. Organizational Behavior and Human Decision Processes, 67(3), 247–257.

    Article  Google Scholar 

  • Hsee, C. K., Loewenstein, G. F., Blount, S., & Bazerman, M. H. (1999). Preference reversals between joint and separate evaluations of options: A review and theoretical analysis. Psychological Bulletin, 125(5), 576–590.

    Article  Google Scholar 

  • Kahneman, D., & Tversky, A. (2000). Choices, Values, and Frames. Cambridge: Cambridge University Press.

    Google Scholar 

  • Krishna, A., Briesch, R., Lehmann, D. R., & Yuan, H. (2002). A meta-analysis of the impact of price presentation on perceived savings. Journal of Retailing, 78(2), 101–118.

    Article  Google Scholar 

  • Lipkus, I. M., & Peters, E. (2009). Understanding the role of numeracy in health: Proposed theoretical framework and practical insights. Health Education & Behavior, 36(6), 1065–1081.

    Article  Google Scholar 

  • Lipkus, I. M., Samsa, G., & Rimer, B. K. (2001). General performance on a numeracy scale among highly educated samples. Medical Decision Making, 21(1), 37–44.

    Article  Google Scholar 

  • Nelson, W., Reyna, V. F., Fagerlin, A., Lipkus, I. M., & Peters, E. (2008). Clinical implications of numeracy: Theory and practice. Annals of Behavioral Medicine, 35(3), 261–274.

    Article  Google Scholar 

  • Peters, E., Dieckmann, N., Dixon, A., Hibbard, J. H., & Mertz, C. K. (2007a). Less is more in presenting quality information to consumers. Medical Care Research and Review, 64(2), 169–190.

    Article  Google Scholar 

  • Peters, E., Hart, S. P., & Fraenkel, L. (2011). Informing patients: The influence of numeracy, framing, and format of side effect information on risk perceptions. Medical Decision Making, 31(3), 432–436.

    Article  Google Scholar 

  • Peters, E., Hibbard, J., Slovic, P., & Dieckmann, N. (2007b). Numeracy skill and the communication, comprehension, and use of risk-benefit information. Health Affairs, 26(3), 741–748.

    Article  Google Scholar 

  • Peters, E., Västfjäll, D., Slovic, P., Mertz, C. K., Mazzocco, K., & Dickert, S. (2006). Numeracy and decision making. Psychological Science, 17(5), 407–413.

    Article  Google Scholar 

  • Reyna, V. F., & Brainerd, C. J. (2008). Numeracy, ratio bias, and denominator neglect in judgments of risk and probability. Learning and Individual Differences, 18(1), 89–107.

    Article  Google Scholar 

  • Reyna, V. F., Nelson, W. L., Han, P. K., & Dieckmann, N. F. (2009). How numeracy influences risk comprehension and medical decision making. Psychological Bulletin, 135(6), 943–973.

    Article  Google Scholar 

  • Schapira, M. M., Davids, S. L., McAuliffe, T. L., & Nattinger, A. B. (2004). Agreement between scales in the measurement of breast cancer risk perceptions. Risk Analysis, 24(3), 665–673.

    Article  Google Scholar 

  • Scholz, F. W., & Stephens, M. A. (1987). K-sample Anderson–Darling tests. Journal of the American Statistical Association, 82(399), 918–924.

    Google Scholar 

  • Sloman, S. A. (1996). The empirical case for two systems of reasoning. Psychological Bulletin, 119(1), 3–22.

    Article  Google Scholar 

  • Slovic, P., Finucane, M. L., Peters, E., & MacGregor, D. G. (2007). The affect heuristic. European Journal of Operational Research, 177(3), 1333–1352.

    Article  Google Scholar 

  • Stanovich, K. E., & West, R. F. (2000). Individual differences in reasoning: Implications for the rationality debate? Behavioral and Brain Sciences, 23(5), 645–665.

    Article  Google Scholar 

  • Sunstein, C. R., Kahneman, D., Schkade, D., & Ritov, I. (2002). Predictably incoherent judgments. Stanford Law Review, 1153–1215.

  • Woloshin, S., Schwartz, L. M., Moncur, M., Gabriel, S., & Tosteson, A. N. A. (2001). Assessing values for health: Numeracy matters. Medical Decision Making, 21(5), 380–388.

    Article  Google Scholar 

  • Yin, W., & Dubinsky, A. J. (2004). Framing effects of coupon face value on coupon redemption: A literature review with propositions. Journal of Marketing Management, 20(7–8), 877–896.

    Article  Google Scholar 

Download references

Acknowledgements

The authors contributed in equal measure to the development of the paper. Michele Graffeo gratefully acknowledges the financial support of the European Union and of the Provincia Autonoma di Trento (7th Framework Program “People”, Marie Curie Action—COFUND, project PEOCC). The authors wish to thank M. Pisoni and D. Schönsberg for their help in the data collection of the experiment.

Author information

Authors and Affiliations

  1. Department of Economics and Management, University of Trento, Via Inama 5, 38122, Trento, Italy

    Michele Graffeo & Nicolao Bonini

Authors
  1. Michele Graffeo
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Nicolao Bonini
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Michele Graffeo.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Graffeo, M., Bonini, N. The interaction between frames and numeracy in the evaluation of price reductions. Econ Polit 35, 239–250 (2018). https://doi.org/10.1007/s40888-017-0059-1

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s40888-017-0059-1

Keywords

JEL Classification

Search

Navigation