Episode Transcript
Hello, and welcome to episode 41 of coffee with cash, we are continuing our psychology and marketing series. Today I'm gonna be talking about the framing effect.
It's often combined with anchoring, but we're going to talk specifically about the framing effect. And we'll we'll talk about anchoring as and when it comes up. So essentially, the framing effect is a cognitive bias, okay, which basically states that
a position on a particular view changes based on the initial information that a person receives,
or how that view is framed. All right. So you may not recognize this effect,
in terms of being called it being called the framing effect. But you will recognize it in almost all of marketing, but certainly in political life. And in lots of other areas of life, too. Whenever anyone's making an argument or giving a speech, you will notice the framing effect, sort of being used liberally to change people's decisions. Now,
essentially, that's what the framing effect is used for.
It's used to influence someone's decision, by giving them a certain piece of information, first setting the frame, if you like, for the decision making process. And framing can be in the positive, or it can be in the negative, alright, so you can frame something positively, which will produce a certain outcome, or you can frame something negatively, which will produce a different outcome. And always I'm going to get into the science in a minute and how it's applied. In like in the marketing world, framing is like heavily context dependent.
I call them these things. You can't force someone to do something. But basically, framing framing is a heuristic.
A heuristic is essentially a learned behavior that you've repeated over time. And it's sort of like,
you hit the trigger, and the response comes afterward. And so framing is a heuristic. And therefore, in the right context, if you use that heuristic, we use the framing effect, you'll get a disproportionate answer one way or the other, depending on what it is that you're trying to do.
In marketing, it's used a lot, obviously, in pricing, it's used a lot. And it's used to influence how people perceive products. It's a very heavy element of behavioral economics, to the extent where people, you know, make irrational decisions based on the framing effect. And in fact, the framing effect is so powerful that in life and death decisions, it influences whether people choose one direction or another direction. I mean, it is that powerful, the framing effect is so powerful, that it can literally influence life and death decisions.
It can be very emotionally driven, as well. I call it this sort of psychological effects. emotions play a large part in sort of creating the behavior, that the effect is useful. So let's get into the science first.
One of the main studies that demonstrates the framing effect happened in the 60s where they asked a group of participants to
discuss a disease, they called it the Asian disease. And this disease killed sort of in the hypothetical scenario, that the disease killed 600 people. And they were given basically two alternative programs to combat combat the disease. The first one was positioned in terms of saving lives, I have a positive frame, right. So it will say, you can save 200 lives, for sure. By taking this action, or it was framed as you will lose 400 lives by taking this action. Now statistically, that's exactly the same
outcome for the for the disease treatment, right. But
significantly more people chose to save 200 lives than lose 400 lives by taking this particular course of action, which of course logically makes no sense at all right? Makes no sense because they're basically the same thing. You're either going to save 200 people or kill 400 people. And if you're killing 400 people saving 200 people and if you're saving 200 people, you're getting 400 people, but because the question was framed as saving versus losing, people chose the positive frame see
significantly more often than they would choose the negative frame. Another example that you'll see in the supermarket almost every day, whenever you go to a supermarket if you go to the minced meat section, and they'll have the fat component, right, so they did an experiment, where they labeled mincemeat as 25% fat, or 75% Lean. Now, that is entirely the same thing. If it's 75% Lean, it's 25% fat, but they only frame that the labelings that either took 25% fat or 70 75%, lean, and sales significantly increased when it was labeled as 75%. Lean again, illogical, but this is the framing effect. And positive framing in particular, can drive specific actions.
Another example in the science is
a group of participants were given investment options for their retirement funds, so they had their retirement fund. And the options were positioned as either
high risk or high return. Now they're both the same thing, high risk is high return, high return is high risk, because in terms of investments, that's just how it works. But again, when it was framed as being potentially high return, or potentially high risk, made a massive difference in their investment decisions. And unsurprisingly, when it was framed as potentially high returns, significantly more people opted to put their retirement fund into those investments.
The final one, which is a daily occurrence in hospitals, and has really huge ethical implications is around
the efficacy of
operations. Right. So let's say that there is an operation, there's a specific study that was done where the mortality rate of an operation was 10%. Therefore, the survival rate is 90%. So
what the Hospital found was that by telling patients that they had a 90% survival rate, they saw significantly more patients opt into the procedure, versus telling them, they had a 10% mortality rate.
Now, this is literally life and death. And the only variable in the information is how it was framed, there was nothing else that's changed, the actual operation is the same operation, the efficacy of the operation is the same as in both cases, the only thing that's changed is telling the patient that they had a 90% chance of living versus telling them they have a 10% chance of dying.
So the ethical implications with framing are really massive and really significant. Because this effect is so powerful that it it makes people make illogical decisions in certain circumstances,
to the point where if you go back to them and describe the illogical decision, then unable to decipher why they made that decision in the first place. So like all of these psychological techniques, it's really important to understand why they work how they work, and to use them ethically in the in the right context. So again, there's lots of experiments that happen in marketing to I think, probably the most famous experiment around framing is with the Economist. So when the Economist magazine, it used to be a magazine, physical magazine, I think it still is a physical magazine. But when it was moving online, it offered users three price options. For an economist subscription price option number one was $59 for print only.
Price option number two was $125. For online only,
price option number three was $125 for print, and online.
Alright,
then they removed the online only option. So it became $59 versus a combo offer of printing online for $125.
And they saw a significant reduction in the number of people taking the combo offer.
Which is strange, right? Because the thing that they removed was actually a lower value thing. It was the middle product, online only right barrel and it was the same practice but simply by removing that it changed the frame of the
Question. And therefore, they saw a significant drop in the number of people subscribing to print and online. And of course, they brought that option back
in another example, is
anchoring someone to a higher price, therefore setting a frame for pricing. So I'm going to give actually a real example from my experience in India. So
we don't pitch so much now. But when we were pitching back in the day,
we would always before we got to the pitch, the client would know that we weren't cheap, we weren't the cheapest in the market, we were an expensive agency, or relatively expensive agency compared to others in the market. And so we had a long process that we'll go through to do research, and then we'd create a pitch and then we'd go and do the pitch. One of the first things that I would say at the start of the pitches, and often quite clients ask us, Why do we go through all of this effort, and you know, when we're going to go through the presentation, then we're going to show pricing at the end.
And I would say, Well, the reason we don't show pricing at the start is because if I told you it was going to be $10,000 A month from now you just switch off. But of course it's not $10,000. Now, I would say it like that, in like a jovial way. I'm only joking, it's not $10,000. But it's already been set, I've already set the frame. So now consciously or subconsciously, the client is listening with this figure of $10,000 in his head. And he may even consciously or subconsciously be doing some mathematics. Well, if he was joking, maybe maybe it's like half of that. But still $5,000 is a lot, okay, then when we finally got to the final slide, and the price was significantly less, they were like, Oh, well, it wasn't that bad. Actually, the price isn't so bad, it's pretty good. Actually, it's a good price. Because I'd already right at the start of the presentation set the frame, that it isn't $10,000. And then subconsciously, they would have had that number in their mind.
Sometimes there are like really subtle
examples of framing. So a pretty famous ecommerce company
runner ran a split test of free shipping, for orders of $50 of over $50. So the first word was over $50. And the second wording, which is very slightly more positive, was free shipping for orders of $50 or more. So over $50 or $50 or more, and they saw an 8% increase in orders over $50 By hiring $50 or more, which is only like, linguistically it's so similar, but there is a slight positive edge to the second one. So
you know, in marketing, the framing effect is used a lot. And it's again, it's often combined with with anchoring, but
you'll see it in product descriptions a lot.
Focusing on the positive focusing on the positive elements and highlighting the positive attributes, highlighting problems that it solves, but in the positive, as opposed to anything else. That's why saving time and money is such a weak value proposition for any product, I worked for a company once.
Where that, you know, they were insistent on having this this value proposition we save time and money. Yeah, but that's not really powerful. It's nowhere near as powerful as
will significantly increase your revenue,
or will just increase your revenue,
like the positive element is so much more valuable than the negative. And so you still see this a lot like I still think that save time and money is such a weak value proposition. And yet so many still use it. So many companies and brands still use that as their main main value proposition. The most common way people use framing is in pricing. So
in it in like a normal context, you'll see like a price, let's say $100 crossed out $75. All right. So you'll see the $100 first because the the visual hierarchy in the design is such that you see $100 You're anchored. Yeah, so you've got the frame in your mind of $100. Then you see discounted to $75. And suddenly, it's like oh, that's not so expensive. Yeah, because it's, it's less. And so, because you're already anchored at $100. Now, that's the most common version.
A less common, but arguably more effective version is 30% off everything in this rack. Okay.
And arguably, that's a better thing because people doing mental mathematics, right? So they'll look at something that's $100. And they'll be like, Okay, I want that. And I want that, I don't want that. And then, you know, they'll essentially, when they get to the till have a positive surprise at the fact that things are 30% off. Sometimes, by the way, you'll see in some shops, they'll say, 20% of everything in this rack, when they get to the till it's actually 50% off everything in the rack. And sometimes you'll see people, there's not a queue behind them, they'll go, wait, I want more things, and they'll go and get more stuff. Yeah, because they'd been anchored to a set price already, then they realize Hold on, this is totally different and can afford more, and they'll go and buy more stuff.
Obviously, sales promos, sales promotions are a really good way of framing things. A sale promo, particularly if it's combined with scarcity and urgency. So these are additional sort of principles. So scarcity being there's only 10 of these products left an urgency being Sale ends tomorrow, right. So if you are doing sales promos, and you're combining both a discount with with urgency, and
a lack of availability, then essentially what you're doing is you're creating psychologically the perfect promo.
Now, this can be used incredibly unethically, and in a way that I think is starting to become negative. So sometimes you'll go to a website, and there'll be a timer on the website, you know, it's counting down 17 hours left for this sales promo. And if you're a first time visitor, you may think, oh my god, right, I need to make a decision now. versus, versus,
you know, someone who comes regularly and knows that that time is always there. And there's always some sort of sales program. One example of a company that uses the framing effect really well though, is Amazon. So Amazon will have a timer on almost every product that says order in the next three hours and seven minutes to get your order tomorrow. Right. So they're not offering you a discount. They're just saying it's a factual piece of information. But it frames your decision making. If you order in the next three hours, you'll be able to get this tomorrow. Right. And so by setting that frame, you almost create urgency, but without deliberately trying to create urgency.
Of course, customer testimonials are sort of really valuable in framing as well. So when you get customer testimonials, and real customers are talking about the efficacy of your product, or if your brand or your service or whatever it is, then again, you're setting a frame for prospective people who are who are potentially going to be customers of yours in the future. So the framing effect is incredibly powerful. And it's one of all of the the effects that we're going to talk about in this series. I don't know if it's the most powerful, but it's certainly up there as one of the most powerful. And the reason I say that is because it can make people make illogical decisions.
Right? The data would not support those decisions, you can find somebody who is incredibly risk averse.
Investing in risky investments based purely on how the financial services company framed the investment,
just wording, what are the words they use here versus here. And you can almost, you can see someone who is totally risk averse, taking a risk without consciously believing that they're taking a risk. And the framing of it. I think that's why the framing effect is there as the most powerful of the psychological principles in marketing.
Right?
For most people, making a life and death decision should never come down to a Ristic that exists in their mind should never come down to some sort of psychological effect, right? Most people would like to believe making a life and death decision is about logic, and working through the logic of a of any given decision. And yet, what the science shows is that simply by framing a decision as mortality versus survival, you can change someone's decision. You can make them choose a different path just by changing one word, or framing if you like, in a different way. And and that's why I think that framing has such massive ethical implications. I mean, if you think about it,
the NHS in the UK is the National Health Service, we pay our taxes in the UK and one of the benefits of those those taxes are that you get free health care, okay? It's not free because you pay your taxes but essentially, it's free at the point of service. Now.
The motivation for the NHS is partly to save money. Yes, but But ultimately
Patient welfare, they aren't necessarily targeted on income because there is no income for them. They have budgets every year, and they work to those budgets. But what about a country like the US where healthcare is private?
Now, if healthcare is private, and you earn, let's say, $200,000 per operation X, whatever this operation is, you and $200,000 for an operation from the insurance companies,
Are you motivated to use positive framing to increase the likelihood of patients taking that procedure?
And I would argue, yes.
But our patients fully aware, cognizant and conscious of the risks associated with that procedure.
If you're using framing, arguably, no.
And so that's why I think framing has got such massive ethical implications that people don't really think of, they need to be aware of unconscious of
politicians use framing all the time to make almost all of their arguments, and you can, if you really start to focus on this technique, you'll see it in almost any politician whenever they speak.
A politician who may be a hawk, a war monger, yeah, we'll talk about peace. And we'll talk about the importance of humanity and humanitarian aid. And simply by creating that frame of humanitarianism around them, everything else is viewed in that light. Right. And that is incredibly powerful, and, and really dangerous as well. Because then the general population tend to believe that that person is a humanitarian, even though their actions may deliberately show that they are in fact, hawkish, and the warmonger. So, these are challenges that we as humans face, in deconstructing the language that we consume, be it in marketing, be it in politics, be in life, the frames that are used to
understand any given situation, directly impact our view of that situation. And so, you know, I think, because I've done this for so long, I sort of spot it. And it's one of those, the framing effect is one of those strange things that when you become aware of it, it's no longer a mystery, and you kind of spot it all the time, right? It's like if I said to you,
how many red cards did you see today?
But you probably don't know how many red cards we saw today. But if I asked you first thing in the morning,
be conscious of the fact that you're going to see red cards today, because I'm going to ask you about it. And that was consciousness as part of your consciousness, you'd have an answer for me, I saw seven red cars, because you'd notice the red cars as it was happening. And the frame understanding of the frame effect is kind of similar. Like now, hopefully you understand the overall I've explained it in a way that you understand that you'll see it in everyday life, you'll see in your businesses. In a previous podcast, I was talking about how
sometimes an organization's entire strategy can be shifted by one VP of sales or VP of Marketing, framing a failure as a success, right. And because data is so malleable, I don't mean you can change HR, I mean that you can put you can you can present data in almost any way, right?
They'll be able to present the data in a way that shows that their failure is in fact successful. And if they're really good at it, that could change the entire direction of the organization. Now, when they do that, that's an entirely personal thing that they've done for their own self protection. And the consequences of pushing so hard is are incredibly negative for the organization. That's why leaders need to be so aware of these techniques. And they also need to sort of stamp them out and call them out when it's happening. So that people are aware that actually, no, that's not acceptable. Now, the truth is this, whatever the objective truth is, and not allow people to use framing in order to create a perception of a situation. That simply isn't true. Yeah.
So yeah, I think framing is just an incredibly powerful psychological technique in marketing in life in politics. So I hope that now you're a little bit more aware of what framing is, how it's used, how you can use it in the future. You know, think about if you've got kids, right? Think about how can you use framing to help them achieve the things that you want them to achieve? Be that finish that food or complete that
Don't work or do well in school or whatever it is you can use framing because these, these heuristics are innate, they are part of us as human beings. And much like in the last episode with reciprocity, framing is very, very much a human trait and you'll find it everywhere in the world. It doesn't not exist. And I think that's probably true of all of their, all of the psychological techniques that we'll talk about in the future coffee with cush episodes. So join us for the next episode, and we'll talk about another psychological technique in marketing
