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Choiceology · April 7, 2025 · 31m
Ratio Bias: Why We Think in Proportions When We Shouldn't
Why people evaluate savings and costs as proportions rather than absolute amounts. Explores ratio bias — driving 20 minutes to save $10 on a $20 item but not on a $500 item, even though $10 saved is $10 saved regardless.
Highlights
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Ratio bias — we evaluate savings as proportions rather than absolute amounts, leading to irrational effort allocation
Milkman: people will drive across town to save $10 on a $20 item (50% savings) but won't drive across town to save $10 on a $500 item (2% savings), even though the $10 saved and the effort required are identical in both cases.•
Framing effects — the same information presented differently produces systematically different choices
Milkman: framing effects are pervasive and powerful. Describing a medical procedure as having a '90% survival rate' produces dramatically more consent than describing it as having a '10% mortality rate,' despite conveying identical information.