The Framing Effect Experiment – Mortgage Choice


We react to a particular choice in different
ways depending on how it’s presented. We call that the “Framing Effect”. It’s one of the many behaviours which effect
our ability to invest wisely. We went to Bronte beach and asked the locals
two questions. Do you think you could retire on 70% of your
current income? If you say ‘Yes’, put sand here. If ‘No’, there. Aw, I think yes. Yes, I do. Yeah, I think I probably could. Why did you pick no? Because I’m not working at the moment. You picked yes, could you tell us why. I wouldn’t be spending as much money as what I’m spending now. I just don’t think I’ll be doing as much stuff
in my retirement, so I won’t need as much cash. I would sustain a good lifestyle based on
how much I spend. Just playing golf, surfing, relaxing. We then asked them the same question in a
different way. Do you think that you could retire on a 30%
reduction of your current income? Could I survive on a 30% reduction of my income? This is Yes, this is No? Hahahaha, No! No No Who said yes? Can I put three shovels? No. Could you tell us a bit more why you
said no? Y’know because I quite simply wouldn’t have enough
money to live. There is no way I could sustain my current
lifestyle. I need all that I can get now. 30% of nothing is pretty.. hahaha. We react to a particular choice in different
ways depending on how it’s presented. It is great to think positively but let’s
consider our opinions from all angles. That way we can be truely content with our
choices. That’s why it’s important to talk to the experts.

Paul Whisler

One Comment

  1. this is a convenience sample, so we cannot know what the true sample mean is for the population. However you had a well designed experiment, and organised data for the uneducated masses to understand. Overall I would give your group a B+ for this project. Well Done.

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