Stories | February 16, 2010

Magic numbers

Why did the Dow Jones Industrial Average hitting 10,000 make headlines again?

Round numbers catch people's attention and can "influence trading decisions".

And the Wall Street Journal's Carl "The Numbers Guy" Bialik asked why. Or more specifically: "why should investors care more about a rise from 9900 to 10000 than one from 9800 to 9900?".

Round numbers are memorable
Bialik said the 10,000 mark was of particular note as it was considered a milestone when it was first hit in 1999. Furthermore, he wrote: "There is evidence that round numbers in stock prices and indexes do matter, because such round numbers catch people's attention and influence trading decisions."

Other number quirks: Prices ending in 99 seem cheaper
eZonomics explained the "99" price point last year, showing how it can make people think an item is on sale for less. An article in the New York Times highlighted research from the United States that claimed the "o" sound in the word "two" make people think of larger sizes, while the "ee" of "three" seems smaller. Apparently marketers could use the perceived difference to make discounts appear bigger than they actually are.

eZonomics team
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