BIAS OF THE WEEK

Loss Aversion

To discourage shoppers from using disposable plastic bags in grocery stores, researchers introduced either :

  • A $0.05 reward for using reusable bags
  • A $0.05 tax for using disposable bag

With the $0.05 reward, usage decreased by 2%. Meanwhile, with the tax, there was a 42% decrease !

We are often more motivated by loss than by an equivalent gain.

See the full study here :

Homonoff, Tatiana A. 2018. “Can Small Incentives Have Large Effects? The Impact of Taxes versus Bonuses on Disposable Bag Use.” American Economic Journal: Economic Policy10 (4): 177-210.DOI: 10.1257/pol.20150261

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