1% < 0% ?
In the list of strange ways that our minds work, this has earned a ranking place. Research by Mauricio M. Palmeira, and published in the Journal of Consumer Research has found that consumers more readily “get” the value of a low interest rate, than none at all.
When I tell you that instead of 16% I’m going to charge you 1% – your brain is working out that that’s a small fraction of what I could have charged you, and sparking off some happiness. If I tell you that I’m going to charge you 0% howeer, it seems your brain will be confused – 0/20 doesn’t mean anything. How many times worse is 20 than 0? (cue head explosion).
Of course, it’s no news that we humans struggle with zero – it seems the concept of that as a “number” (or lack of number) probably only was used practically only as late as the 9th century AD. So, in human terms, yesterday.
Ironically, when reading the article, I spotted this contextually-targeted ad from Virgin. Genius.