What do pennies and behavioral economics have in common?

You may not know this about me, but I pick up pennies.  As a matter of fact, I will pick up any denomination of money I see on the ground.  I’ve even found paper money in addition to coins. I’m actually pretty good at spotting “free” money. I’m not sure if it’s because I spend too much time looking down or if I just have a sixth sense about finding money on the ground.

Dan Ariely, an author and expert on behavioral economics, recently answered a question regarding picking up/not picking up money in the Wall Street Journal.  The question posed addressed why people will not stop on the street to pick up a dime, but would certainly stop to pick one up if it fell out of their pocket.

Dan pointed out that when someone picks up 10 cents, they add to their wealth (just a bit), but when they reclaim a dime that was dropped, they prevent a loss – and preventing a loss is perceived as much more important and valuable.

It’s amazing to me how the principals of behavior economics can explain human behavior.  In my mind, loss is definitely an incentive. I have no desire to lose money.  But honestly “finding” is also an incentive (at least for me).

Link to Dan’s article in the Wall Street Journal or contact me to discuss how behavioral economics might be influencing your current and potential customers.