By Jingjing Ma & Neal J. Roese
Numbers make life easier, but they may also have a hidden psychological cost. Below, Jingjing Ma and Neal J. Roese show that fewer rewards can be as satisfying as more rewards when the rewards are less countable, and suggest that this countability effect occurs not only in reward distributions but also in marketing promotions and customer loyalty programs.
We are surrounded by numbers. Every way we turn, we are bombarded by prices, discounts, addresses, phone numbers, temperatures, sizes … all in terms of numbers. Of course, numbers make life easier. The global economy depends on the sheer efficiency of basic math, and finance is built on the platform of digital computation. Individual consumers instantly understand how big, expensive, heavy, or old something is, with numbers. But might numbers have a hidden psychological cost?
Numbers and Benchmarking
Numbers are inherent in personal finances. People think about their pay and their living expenses in terms of numbers. One reason why math is so useful is that it permits easy comparisons. This cup of coffee is more expensive than the one sold down the street. This person’s salary is less than that of his coworker. Numbers allow easy benchmarking: you can see instantly whether a given object has greater or lesser value. Many years of psychological research have shown that people are more sensitive to relative than absolute amounts. As exemplified in Nobel economics prize winner Daniel Kahneman’s work on prospect theory1, people spontaneously look for and use reference points in assessing the value of gains and losses. This boils down to contrasts between pairs of objects in which the salience of something better makes a focal object seem, by contrast, inferior. The flip side is that an inferior referent makes a focal object seem, by contrast, more valuable. People can track multiple reference points, and they use this information in an automatic, unconscious manner.
An important type of reference point is social – i.e., comparing one’s own talents, assets, and prospects to those of others. Inequity abounds in the modern world, and it hurts to realise that someone else makes more money than you, especially when they seem to be working no harder than you.2,3 Resentment, reduced job satisfaction, and weaker productivity may follow.4 Inequity in pay is one thing, but consider also the various reward and loyalty programs that companies offer as basic components of their marketing effort: price reductions for repeated purchases at a coffee shop, or free flights after repeated flying on the same airline. If one customer gets a worse reward than another, resentment may result. Indeed, stories abound of consumer revolt upon realisation of price discrimination, as when early Amazon customers realised that they were being offered different prices for the same good merely because of the type of computer they were using. Inequity seems a fact of the modern global economy, but might there be a way to lessen the sting of that inequity?
Numbers and Countable Rewards
Numbers themselves were the focal point of our research. Numbers make comparisons easy,5,6 but if the key problem is comparing your reward with someone else’s, then reducing the salience of numbers might also reduce the spontaneous interpersonal comparisons that arise after getting a reward. In our research, we examined the effect of a very simple change in how rewards were presented to people: how easily they could be counted. A bonus check is easily counted — the number is printed right there, easy to grasp. But the exact monetary value given in the form of gifts (a coffeemaker and several pounds of coffee beans) is not so easily counted. Unless the price tag is obvious, this sort of concrete reward invites a different sort of reaction – focusing on the pleasant experience of having a cup of freshly brewed coffee.
In several experiments conducted with participants in both the U.S. and China,7 we took the general approach of compensating (for people’s participation in the study) in either of two formats: easily counted (e.g., 3 vs. 2 slices of cake, 2 bottles vs. 1 bottle of shampoo) or less easily counted (e.g., large vs. small slice of cake, large vs. small bottle of shampoo). In all cases, we also introduced an inequity: some participants got bigger rewards than did others. We then observed how satisfied people would be with their rewards.
Ordinarily, people dislike inequity. The same work should be worth the same pay. In our studies, despite all participants doing the exact same work, some got more compensation than others. And just as one would expect, those people compensated with easily counted rewards (including cash) responded to the inequity – those who were undercompensated were less satisfied than those who were overcompensated. But a funny thing happened when people got rewards that were less countable – they were much less sensitive to the inequity. That is, those who were undercompensated were just as satisfied as those who were overcompensated, as long as the reward was less countable. It’s important to keep in mind that in all these studies, every participant knew full well what the inequity was, because they directly observed the rewards being passed around at the end of the study
The Powerful Role of Countability
Why did this occur? By probing further, we discovered that it was the degree of spontaneous comparing that made the difference. When the rewards were countable, people were more likely to compare themselves with others and to feel unfairly treated when there was an inequity. But when the rewards were less countable, people made significantly fewer comparisons, and instead focused mainly on the experiential aspect of their reward – if it was a piece of cake, they focused on how delicious it would taste, and apparently cared little that someone else had a bigger piece. Remarkably, with fewer countable rewards, people were just as happy with less.
The surprisingly powerful role of countability fits within a broader conceptual model put forth a number of years ago by Christopher Hsee, a professor in the Booth School of Business at the University of Chicago.8 According to his general evaluability theory,9 it is easier for people to see objects as better or worse when the object is evaluated jointly (i.e., alongside a referent rather than in isolation), with knowledge (i.e., some familiarity with the class of objects under scrutiny), and with a natural understanding of biologically relevant attributes (for example, people have an inherent understanding of which temperatures feel better or worse). As long as there is one of these three kinds of reference information available, the final evaluation will be of high evaluability, meaning that people will be more reactive to variations in perceived value. Our research builds on this theoretical platform by showing that sometimes people are not reactive to variations in value even when they have ample reference information (i.e., joint evaluation), because of the unique way that numbers activate (and a lack of numbers do not activate) spontaneous social comparisons.
Countability in Business
By harnessing countability, many businesses may find a simple and cost-effective way to lessen the sting of inequities in bonuses or rewards, thereby elevating satisfaction and loyalty at minimal cost. Beyond the employment realm of an employer’s allocating pay to multiple employees, countability effects can be marshalled for promotions offered by retailers and service providers. Numerous marketing promotions feature salient numerical information, such as buy-one-get-one free and 25,000 bonus miles upon enrollment in an air travel loyalty program. By contrast, other marketing promotions focus on the act of consumption itself, such as free vacation packages, free goods, or special gifts. In one of our studies conducted in a Chinese supermarket, we found that when consumers missed out on a deal, they were more upset when that deal was countable (e.g., buy one bottle of shampoo and get another one free) rather than when not so countable (e.g., a larger bottle of shampoo at a regular price). Further, in an online survey conducted in the U.S., consumers evaluated various airline reward packages. They imagined attaining a particular reward (say, 25,000 bonus miles for signing up) and then were understandably less satisfied when learning that a superior reward package was available (40,000 bonus miles). But when the reward package was less countable—a free round trip—finding out about a better deal did nothing to diminish satisfaction. Instead, people focused on the experiential possibilities of that less countable reward (a free trip to Miami: sun, palm trees, and warm weather!).
Besides changing the formats of the rewards, interventions that direct consumers’ attention away from numbers and over to consumption experiences can also reduce perceptions of unfairness and so bolster satisfaction. In another of our studies, this time involving getting cake as a reward, we found that people felt just as satisfied even if getting an objectively (and countably) unfair reward (getting 2 rather than 3 slices of cake) when they were prompted to focus their attention on the taste of the cake. On the other hand, participants who were instructed to calculate the percentage of uncountable cake (a smaller vs. bigger slice) suddenly became more sensitive to the inequity. That is, by getting participants who received an uncountable reward to think in terms of numbers, they behaved as if they had actually been given their reward in countable terms. The message from studies like this is clear. If employers, retailers, and service providers can shift attention away from numbers and toward the experiential value of rewards that they give, they can expect their recipients to be more satisfied, and at the end of the day, more loyal.
Paradoxically, a smaller reward can be just as satisfying as a bigger reward, under the right circumstances. The extent to which people focus on numbers versus experiences makes the difference between heightened versus reduced sensitivity to inequity. Non-numerical reward formats, or focusing on consumption experiences themselves, can neutralise the tendency to engage in interpersonal comparisons, and thus improve satisfaction even when the reward is objectively small. It has been said that you cannot have your cake and eat it too. However, it may well be possible to enjoy an unfairly small cake if you do not count it too.
About the Authors
Jingjing Ma is a doctoral candidate in marketing at the Kellogg School of Management at Northwestern University. Her research focuses on consumer judgment and decision-making, and involves lab experiments, field studies, and eye tracking methods. Her research has appeared in the Journal of Consumer Research and The Wall Street Journal.
Neal Roese is the John L. and Helen Kellogg Professor of Marketing at the Kellogg School of Management at Northwestern University. The author of over 70 scholarly articles, Professor Roese’s research centers on the psychology of everyday decisions, with a particular focus on regret, counterfactual thinking, and hindsight bias. His 2005 book, If Only, focused on the experience of regret in daily life. His research has been funded by grants from the National Science Foundation, the National Institute for Mental Health, and the Ford Foundation.
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