# Consumer Math

Here are a few articles Iâ€™ve found that give us a glimpse into the (sad) state of consumer math in America, and what we can do about it.

This article on NBC News sums up a situation Iâ€™m sure weâ€™ve all found ourselves in:

â€śThink about the last time you had lunch with four or more friends. What happened when the bill came?Â  Everyone pulled out calculators, there was a lot of murmuring and head scratching and still some of your friends just ended up throwing down a \$20 bill and hoping for the best.Â  Now, imagine that crowd in a car dealership or with a mortgage broker. They wouldnâ€™t stand a chance.â€ť

Why are these situations always so difficult?Â This article from the Atlantic sums up some typical issues consumers have with math. The intro gives a great example:

â€śThis is your brain on shopping: and itâ€™s not very smartâ€¦

You walk into a Starbucks and see two deals for a cup of coffee. The first deal offers 33% extra coffee. The second takes 33% off the regular price. Whatâ€™s the better deal?

â€śTheyâ€™re about equal!â€ť youâ€™d say, if youâ€™re like the students who participated in a new study published in theÂ Journal of Marketing. And youâ€™d be wrong. The deals appear to be equivalent, but in fact, a 33% discount is the same asÂ a 50 percent increase in quantity. Math time: Letâ€™s say the standard coffee is \$1 for 3 quarts (\$0.33 per quart). The first deal gets you 4 quarts for \$1 (\$0.25 per quart) and the second gets you 3 quarts for 66 cents (\$.22 per quart).

The upshot: Getting something extra â€śfor freeâ€ť feels better than getting the same for less.â€ť

Itâ€™s not just that weâ€™re all â€śbad at mathâ€ť. This interesting article from ConversionXL explains some of the pricing tricks used to confuse consumers into spending more. Â My favorite is the magic of 9 :

â€śIn one of the experiments done by University of Chicago and MIT, a mail order catalog was printed in 3 different versions. One womenâ€™s clothing items tested was sold for \$39. In experimental versions of the catalog, the company offered the same item for \$34 and \$44. Each catalog was sent to an identically sized sample.

There were more sales at the charm price of \$39 than at either of the other prices, including the cheaper \$34. \$39 had both greater sales volume and greater profit per saleâ€¦

People used to download music for free, then Steve Jobs convinced them to pay. How? By charging 99 cents.â€ť

A better grasp pf the math, along with awareness of these tricks of the trade can help students make better choices in the future.