A few weeks ago I asked “Who Wants A FREE Gift Card?” The generosity was a combination of – a “thank you” to my readers – and – an experiment on consumerism. You may be surprised by the results.
Let me first announce the winner of the FREE gift card before I get too tangled in the tests.
And the winner is…
Elle runs the blog Couple Money. It’s all about handling family and finances responsibly in order to spend more time doing what you love.
Congratulations and thanks for subscribing to Funancials!
In case you forgot, there were two potential gifts to win:
1. A FREE $20 Gift Card
2. If you send me $10, I’ll send you a $50 Gift Card
Which one did Elle choose? She said (in her comment) that she would prefer the FREE $20 Gift Card.
So let’s think about this…
When given the choice between a gain of $20 or a gain of $40, the choice should be obvious, right? If you think like an Economist (a logical thinker) you would instantly choose the 2nd option every time. But why did Elle choose the former?
$40 > $20
It seems simple, but it’s not.
Remember – money isn’t always mathematical. As much as I want it to be, it’s not. There is an equal amount of psychology that goes into money management.
I also understand that maybe the results are skewed because of trust. You may not know me well enough. Or maybe you do know me and you still don’t trust me to send you the gift card. Regardless…have some balls.
How Is FREE Affecting Me?
You may not think that you’re influenced by the FREE phenomenon but you are, I promise you. I am and I openly admit to it. I purchased a 55-inch Samsung LED TV a few weeks ago. It’s absolutely stunning. But to be honest with you, it’s beauty isn’t what caught my attention in the store.
I purchased the flat screen from Costco. With the purchase of this 55-inch Samsung, you also receive a FREE Blu-ray Player. What a deal!
Was it really a deal? I have no clue. But it certainly set it apart from the rest.
How Is FREE Affecting You?
Are you drawn to things that are BOGO (buy one get one free)? I’m guessing you are. We all are. The sound of FREE is music to our ears.
Because it’s not only free, it’s RISK FREE. The majority of us are such sissies that we would rather “not lose” than “win.” In psychological terms, loss aversion refers to peoples’ tendency to strongly prefer avoiding losses to acquiring gains.
If I am offered something for free, there is no way I can lose.
Or is there?
What if I choose an inferior product because it was offered to me for FREE? What if someone I hire for FREE does a poor job with his assigned project?
What if FREE came at a cost?