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# How can school children intuit why over 100, D is larger? But under 100, D% is larger?

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## Follow the Rule of 100

Should discounts be percentages or absolutes?

Consider a \$150 blender. Should you offer 20% off? Or an equivalent \$30 off?

• **Over \$100?** Give absolutes (e.g., \$30)
• Under \$100? Give percents (e.g., 20%) In both cases, you show the higher numeral. For a \$50 blender, 20% off is the same as \\$10 off — yet 20% is more persuasive because it’s a higher numeral. For a \$150 blender, the absolute discount (\\$30 off) is a higher numeral (González, Esteva, Roggeveen, & Grewal, 2016). #### References González, E. M., Esteva, E., Roggeveen, A. L., & Grewal, D. (2016). Amount off versus percentage off—when does it matter?. Journal of Business Research, 69(3), 1022-1027. Let d = discount, p = price. Then$d, p > 0$because there is no free lunch and the quotation is expatiating on discounts. Then \$ off vs. % off $\iff p - d \quad \text{ vs } \quad p - (d/100)p \iff -d \quad \text{ vs } \quad -dp/100 \iff 1 \quad \text{ vs } \quad p/100 \iff p \quad \text{ vs } \quad 100.$

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(I’m going to do this post in pounds so that I don’t have to escape dollar signs everywhere. But the currency doesn’t matter.)

“Per cent” is, literally, “for each hundred”. Imagine making a literal pile of money from the cost of the item, and splitting it up into stacks of £100. So if the item costs £500, you have five stacks.

Now, a discount that’s “ten pounds” means just that: take £10 out of the pile (any stack, it doesn’t matter) and put it back in your wallet.

But “ten per cent” means £10 out of every single one of those stacks. For five stacks, that’s £50 I get to keep! I’d rather have that discount.

What if the price is only £100, though? In that case, there’s only one stack, and “£10 from one stack” and “£10 from every stack” mean the same thing.

Below £100, the intuition is a little bit trickier, because you have to imagine the 10% case as taking “part of” £10 from a stack that’s “part of” £100. But it’s not an insurmountable hurdle to envision that, and grasp that it won’t be as good as taking out a full £10.

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