Finance Reframed

Clear Thinking

Framing effect

Also known as: Framing effect

“Put it that way, and of course I'd take the deal.”

What's happening

The exact same choice can look completely different depending on how it's worded — a gain or a loss, a fee or a discount, a rate per year or per day — and people often respond to the framing itself, not the substance underneath it.

A financial example

A $500 purchase can feel reasonable when framed as “just $50 a month,” but expensive when framed as “you’re spending $500.” The cost is identical, but changing the frame changes how significant the expense feels.

A better question

If this were worded the opposite way, would I still make the same choice?