Loss Aversion teaches us that people like to gain things, but that they like hanging on to what they have even more and feel losses much more profoundly than gains. So, you would think that effective policy to reduce disposable bag usage by charging a surcharge for a grocery bag would tap into these feelings.

 

Not so fast. New research reveals that Loss Aversion is not the reason for the grocery bag surcharge’s success. 

 

In this episode of The Intuitive Customer, our guest host Alicea “Allie” Lieberman, a Ph.D. candidate from the University of California, San Diego, shares her findings with us regarding why incentives work. The Harvard Business Review also published an article about her results, “Why We’re Incentivized by Discounts and Surcharges” in February of this year. She and her research partner Kristen Duke also published their study in a peer-reviewed journal that shows how Social Norms help drive the effectiveness of incentives to change customer behavior.