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"People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown." What people say they would do and w
by cody3222 5y ago
"People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown."
What people say they would do and what they actually do are 2 very different things.
The conversion rate of actual behavior needs to be tested for this to mean something useful.
- yunohn 5y agoExactly this. Plus, I didn’t see “profit” mentioned anywhere in the costs, and the article also touches upon the (mostly obvious) fact that for high margin goods this would impact them negatively.
- tdmckinlay 5y agoThe effect was tested on profit margins as low as 17% and as high as 55%. Outside those ranges it's unclear if it will still work.
- yunohn 5y agoI understand, so maybe my critique was a bit of my personal views. Rather I meant that it’s a bit odd that costs are clearly specified, but the consumer has to calculate the profit themselves. In my mind, that actually makes it less transparent as high profit margins are what drive the crazy capitalist market we have today, and associating small values to material and labor doesn’t make me feel better when the profit is the “artificial” portion of my purchase price.
- mitchdoogle 5y agoI think the assumption is whatever the difference in what the item costs vs the total listed on the package is the profit
- edent 5y agoAs it says in the article "Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1%"
- tyingq 5y agoInteresting. I'm curious how they got to $3.23 of labor for 16 ounces. And I suppose that drops as they sell more, assuming it's made in large batches.
- lupire 5y agoThere's no reason to believe the costs are accurate at all. Obviously a business would lie if they applied this theory to their pricing. The experiment was based on the presence and magnitude of numbers in the advertising.
- giu 5y agoGood point! Sadly, I don't have access to the Harvard study (https://pubsonline.informs.org/doi/10.1287/mksc.2019.1200 https://pubsonline.informs.org/doi/10.1287/mksc.2019.1200), so maybe someone with access to it could check it, but the linked article might be misleading in some aspects (depending on the results of the study shown in the paper). From the study's abstract: > A preregistered field experiment indicated that diners were 21.1% more likely to buy a bowl of chicken noodle soup when a sign revealing its ingredients also included the cafeteria’s costs to make it. From the linked article's sub-title: > Sales of a chicken noodle soup increased 21.1% when people were shown the costs of making it. The study's abstract mentions that they were more likely to buy a bowl of chicken; it's not mentioned that they actually bought it.
- tuukkah 5y ago"21.1% more likely" is how articles phrase a 21.1% increase in observed frequency. "Sales increased 21.1%" is equivalent as long as the unit price remained the same.
- vntok 5y agoThe article is very confusing on this front. > People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown Surely that cannot be correct. Possibly 14.2% of the people who were asked said that they would be "somewhat" more likely to buy X with more data stuck to its label (does any data improve sales? Did they A/B the label by adding random info?). This is very different from them acting upon it though.
- tuukkah 5y agoActually, the figure 14.2% does not even appear in the research article. The experiment was between two groups of random Mechanical Turk workers: one group was not shown the cost breakdown while the other group was. The workers answered how likely they were to buy the product on a scale from 1 to 7. If you calculate the average increase from one group to the other, sure enough the number you get is 14.2% but it is not a probability.
- elliekelly 5y agoIt’s been a while since I worked retail but unless something has drastically changed most people don’t read product packaging very closely. I would constantly have people walk up to me with an item and ask a question that was not only clearly answered on the package, but the information was _highlighted_ for them. I just don’t think most people would even notice the cost breakdown let alone read it and think about what the information means.
- darkerside 5y agoPeople have been ignoring the highlighted bullshit on the package since long before they were pop-up ads on the internet
- gpm 5y agoYou're sure it's most people? The people coming to ask you questions are a self selected set...
- tdmckinlay 5y agoAuthor of the summary here: You are right regarding the chocolate bar experiment. That's why the researchers ran multiple experiments, some of which measured actual behavior: - People were 16.1% more likely to bid for a gift card for an Everlane backpack (vs a J.Crew one) when they saw cost information about it - Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1% when costs were disclosed
- shoto_io 5y agoHi Thomas, thanks for your work. I am a fan! Just a minor comment: I find using decimals places (like 16.1% and 21.1%) in human experiments pretty irritating. It feels like false precision. After all, these experiments must have confidence intervals. If I had to guess, I’d assume at least a +/- 5 ppts variability in all these numbers. What’s your view on that?
- tdmckinlay 5y agoThank you so much! I agree that the figures can vary for many reasons and we shouldn't expect them to be exactly the same (some things we don't end up controlling for). At the same time, if we take the experiment of the soup for example: They measured 9,227 sales of it so the 21.1% increase is quite robust and I'd expect the error margin to be much lower than 5% either way - so in some ways the precision is warranted. I also feel that if I were to round a 21.4% to 20% I'd be miscommunicating the findings of the research :)
- Taylor_OD 5y agoSure. You could call pretty much all research into question using this argument. A huge amount of research is done based on questionnaires.
- chiefofgxbxl 5y agoIs there an official name for this sort of effect? I've been looking for something to call this. For example, we've had this effect at work when trying to organize social outings; people say they're interested in some activity X (e.g. hiking, board games, etc.), but then the day of that event comes and nobody shows up. The bar is very low to say you're interested in something, but doing actually takes effort.
- johnsmith4739 5y agoSocial Conformity - it would be costly for the participants to say no, from a social standpoint, but when the wallets have to open, there is always an excuse.
- benjohnson 5y agoWe fight this by giving everybody a token bit of public labor - tell someone they need to bring cookies, another needs to bring party-hats and someone else to bring punch and you'll find that they don't want to let others down.
- porb121 5y agoexpressed vs revealed preference