One day you’re blogging about it, the next day, someone publishes a journal article about percentages and the confusion people have about them.
In the paper “When Two and Two is Not Equal to Four: Errors in Processing Multiple Percentage Changes,” Rao and Haipeng Chen, a Carlson School doctoral alum and assistant professor at the University of Miami, show that consumers treat percentages like whole numbers, and this results in systematic errors in calculation. People simply aren’t coming up with four when they add two plus two. The paper will appear in a forthcoming issue of the Journal of Consumer Research.
Well, what do you expect? It’s not easy to take 35% off 25% in your head, unless your parents and teachers made you do mental math till your head hurt (who am I kidding, I still enjoy doing math in my head and beating people with calculators, though I get worse with every passing year). Companies that sell products based on discounting of already discounted merchandise know that people will add them up in their head and overestimate the discount. It is dishonest marketing at best, and downright deceptive if you’re extremely cynical (I believe the worst of advertisers and PR).
Wow, two posts about percentages in two days, I must have nothing better to do…