Rory Sutherland Rory Sutherland

Why we hate surge pricing – but love happy hour

issue 30 September 2023

A Dominican and a Jesuit were chain smokers. Both were eager to be allowed to smoke while performing their devotions, but needed to gain permission from a higher authority. ‘I tried asking the Prior, but he was dead against it,’ said the Dominican.

‘What did you ask, precisely?’ enquired the Jesuit.

‘Well, I asked him whether it was acceptable to smoke while I was praying.’

‘Wrong question,’ replied the Jesuit. ‘I asked my Abbot whether I could pray while I was smoking. Permission granted.’

To economists, price is a number. To everyone else, price is a feeling

This is called a framing effect and is one of the best attested findings in the psychological sciences. Quite simply it reveals that the way information is presented has a potent and ineluctable effect on how we respond to it.

The fact that we react differently to information according to context is perhaps an evolutionary necessity: our emotional response to the rearward sound of approaching footsteps needs to be heightened in a dark alley compared with a crowded street in daytime. If we did not calibrate our anxiety levels in this way, we would either be vulnerable to attack or else look damned silly walking down Oxford Street constantly peering nervously over our shoulders.

Moreover, if you read the work of Andy Clark, professor of cognitive philosophy at the University of Sussex and author of The Experience Machine (in my opinion one of the most important books yet published this century), this perceptual feature is inescapable if our brains are to process information efficiently. In his book, Clark both revives and expands an earlier theory of Hermann von Helmholtz, which asserted that what we really perceive is very largely an internal projection of what we expect to see, with our sensory apparatus dedicated only to updating those elements which deviate from our self-generated expectation.

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