The Daily Update: Penny for Your Thoughts

The other day we came across a term that that describes a behaviour we are all familiar with, but most of us never knew it had a name. We have all seen supermarkets pricing products one penny below the whole number, so £1.99 rather than £2, as consumers place more emphasis on the leftmost digit of a product’s price, believing they are getting a bargain. This is called Left Digit Bias.

Left Digit Bias influences the decision making of consumers paying attention to the leftmost digit rather than considering the price of a product as a whole. It is a heuristics behaviour, a mental shortcut that our brains use that allows us to make decisions quickly without having all the relevant information. They can be thought of as rules of thumb that allow us to make a decision that has a high probability of being correct without having to think everything through

It’s not just shoppers that get sucked in by the so-called left-digit bias; investors, traders and financial journalists also have a tendency to place more emphasis on the leftmost digit of a price, size or market.  How many times have we read things like "10-year surge to a 16-year high of 5.02%" even though it had been in the 4’s for 10 weeks before that, also breaking multi-year records?

Behavioural heuristics are also common in medicine and can lead to biases that affect clinical decisions.  In a study by the New England Journal of Medicine, it found that patients who are hospitalised with a heart attack and who are 80 years and 2 weeks of age may be perceived by doctors as being at greater risk for complications, thus may receive more conservative treatment than patients who are 79 years and 50 weeks of age, a bias that could lead to doctors to categorise patients as being “in their 80s” rather than “in their 70s.

Talking of digits, we came across a fascinating example of how technology influences our non-verbal communication; the traditional hand gesture for a phone call, where the thumb and little finger are extended and the other three fingers are curled into the palm, is being replaced by a new gesture among younger generations. 

Instead of mimicking the shape of an old-fashioned telephone handset, many young people now simply hold their hand flat against their head, palm facing their ear, to indicate they are talking on a smartphone. We also hear that it is now more commonplace for doorbells to be rung with the thumb, rather than the traditional index finger, influenced by the use of mobile phones.

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