consumer-behavior on S Anand

The best time to buy everything

Wed, 13 Sep 2006 12:00:00 +0000

The best time to buy everything: when to buy air tickets, get great deals on electronics, and so on.

Psychological framing in behavioral economics

Fri, 12 May 2006 12:00:00 +0000

People act on the spur of the moment, most of the time. So, as you can see from this example below, psychology can be more important than economics.

Senthil Mullainathan worked with a bank in South Africa that wanted to make more loans. A neoclassical economist would have offered simple counsel: lower the interest rate, and people will borrow more. Instead, the bank chose to investigate some contextual factors in the process of making its offer. It mailed letters to 70,000 previous borrowers saying, “Congratulations! You’re eligible for a special interest rate on a new loan.” But the interest rate was randomized on the letters: some got a low rate, others a high one. “It was done like a randomized clinical trial of a drug,” Mullainathan explains.

The bank also randomized several aspects of the letter. In one corner there was a photo-varied by gender and race-of a bank employee. Different types of tables, some simple, others complex, showed examples of loans. Some letters offered a chance to win a cell phone in a lottery if the customer came in to inquire about a loan. Some had deadlines. Randomizing these elements allowed Mullainathan to evaluate the effect of psychological factors as opposed to the things that economists care about, i.e., interest rates-and to quantify their effect on response in basis points.

“What we found stunned me,” he says. “We found that any one of these things had an effect equal to one to five percentage points of interest! A woman’s photo instead of a man’s increased demand among men by as much as dropping the interest rate five points!

Comments

Lesson 1: What Is Behavioral Economics? « The Innovative Economics Initiative 15 Nov 2011 6:25 am (pingback): […] (the background). This concept, presenting the same object in different formats, is known as framing, and is one of the most well-known biases used by Behavioral Economists. For example, if I asked […]
bala 8 May 2012 2:37 pm: i have written a tamil book on behavioral economics it can be downloaded from the link www.scribd.com/doc/88128740 the book குகைமனிதனும் கோடிரூபாயும் நூல் 1000 வாசகர்களுக்கு மேல் வாசிக்கப்பட்டுள்ளது may you go through it and give your comments. and forward to your friends if it is good thank you bala

Packaging

Wed, 12 Apr 2006 12:00:00 +0000

Packaging can make a huge difference to products. It really hit me when I saw this bottle of Heinz’s ketchup. My two big problems with normal ketchup bottles are: (a) the sauce spills to the side of the bottle and sticks to the cap, and (b) it’s tough to pour the last bits of sauce – you have to hit the bottle a lot.

Now, I didn’t know I had these problems. But when I saw this bottle, it hit me. You keep the bottle upside down – so it’s easy to pour the last bits of sauce. And they way the nozzle valve is designed, the sauce doesn’t stick to the cap. Perfect! Since then, I don’t buy any other ketchup bottle. Even if I WANT ketchup, I don’t buy it unless I get this bottle. Packaging made be brand loyal. (Caveat: I’m not REALLY brand loyal. I’d buy any ketchup with this packaging. But only Heinz has it right now.)

The same thing with honey. The same packaging with honey gives me a third advantage. I can drink a bit of honey directly by holding up the bottle over my mouth and squeezing it. Plus, I don’t need a spoon. Because of this, my consumption of honey has shot up to 1 bottle of honey every month. Further, I have started spreading honey over ice cream these days. Note: packaging changed my eating pattern.

So, impressed by all this, I wandered around superstores, exploring the innovations in packaging (mainly in food). I will shortly blog about that. In the meantime, here are some innovative packages introduced around when Heinz’s inverted ketchup was.

Comments

reshma anand 25 Nov 2006 10:20 pm: most shampoo and shower gel packs have this ‘inverted bottle’ concept. it would be interesting to know who got it first. other examples which come to mind, which seem (so commonsensical in hindsight) are the parachute oil jar with a wide mouth and milkmaid in the form of a squeezy tube. there was also a ketchup advert on air in uk, showing ketchup through a squeezy tube some months back. maybe that packaging could have you brand-flirting again.

What Teens Want

Mon, 10 Oct 2005 12:00:00 +0000

What Teens Want. From a session at Web2.0.

The big laugh line of the session was when Safa asked them how they’d go about researching information on a CD player they might want to buy. They looked at him in silent puzzlement, as if to say, “why would we buy a CD player?”

Americans get better service because they complain more

Mon, 26 Apr 2004 12:00:00 +0000

The Economist: Americans get better service because they complain more. (subscription required)

Pizza purchases and tipping

Wed, 31 Dec 2003 12:00:00 +0000

Interesting statistics on pizza purchases and tips.