Lord knows most people are not as financially literate as they should be. But that doesn’t mean we have to see financial illiteracy even when it doesn’t exist.
In Britain, the price-comparison website moneysupermarket.com hired people to stand on the sidewalk offering to give anyone who asked a free £5 note, with no obligations or restrictions. Out of 1,800 people, only 28 accepted the offer. What does this mean?
According to a press release:
“This exercise reveals a fundamental inertia which is stopping people from making sensible financial decisions,” said Tim Moss, head of loans and debt at moneysupermarket.com. “This was a completely genuine, no strings attached offer. People simply had to approach the sandwich board wearer and ask for a fiver. If more than 98 percent of the people who passed by couldn’t be bothered to do that, it raises some interesting questions about what needs to be done to persuade people to make an effort to improve their financial positions.
Would anyone else like to join me in calling B.S. on moneysupermarket.com?
Take a look at this picture of the guy who’s offering the money. His hand-lettered sandwich board says “If you ask me for a £5 note you can have one.” Does that really look like a “completely genuine, no strings attached offer?”
Aside from the fact that the gentlemen looks a bit — well, un-banker-like — this is not at all the equivalent of setting a stack of £5 notes on a table and giving them away. At the very least, you’re going to have to talk to this guy. And a reasonable expectation is that the conversation may cost you something, whether in time, annoyance, or perhaps worse.
Did the people who avoided this guy really exhibit a “fundamental inertia” or were they just smart enough to know that there’s no such thing as a free lunch — or free money?
(Aside: our resident quote bleggar Fred Shapiro, filling in for William Safire, let us know this weekend that Milton Friedman didn’t coin the “no free lunch” phrase.)
(Hat tip: Rich K.)
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I think the experiment would have made more sense if they had simply left a five pound note on the ground and observed how many people would pick it up and take it. This way you avoid talking to the weird guy, where people likely assume there is some kind of catch involved.
A professor of mine in college once scattered $5 bills around the classroom before class, then asked how many people had seen the money on the floor and not picked it up. A surprising number of hands went up.
Perhaps still BS, but there were a _lot_ of people that didn’t take the free “no strings attached” money. (Except for the one guy who was familiar with a game called “poo dollar,” most everybody else’s rational for not picking up the money was along the lines of “somebody might be watching.”)
This reminds me of the “Free Meal” booths I see at the restaurants in the resort town where we vacation. The free meal is contingent upon listening to a time share pitch. If I saw the guy with the sandwich board, I would have automatically thought “Sales pitch required” and stayed far away.
The wording of the sandwich board would have made me a litte suspicious too. Have “one” what? I would have suspected I was on some sort of prank show where when I ask for the five, I get “one” bucket of something gross dumped on me. Just because I’m paranoid doesn’t mean they’re not out to get me
I work in a downtown area in a large city (one of the top 10 in US) anyway, I took 3 rolls of pennies and spilled them loose on the ground on the street. Walked across the street and watched people pick them up. No economic lesson learned, just 10 minutes of laughing at people for the cost of $1.50.
I always see internet ads for “free* iPod, Click here”, or “free* Playstation”.
I’ve seen TV ads for a product where if you don’t like it, you can keep it for free. Yeah… after how much paperwork? The product is probably so cheap that the company finds it easier to just give up the product than having to deal with returns.
This is no different. I’d assume this guy on the street would have a lengthy survey to complete or form to mail in to get a rebate. Or maybe it’d be a £5 note of funny-money good for only 1 place (in other words, a coupon).
“Don’t be silly, if he was actually giving away £5 bills people would have taken them already!”
If it was truly a no-strings attached offer, I’d say the idiocy of the people at moneysupermarket.com is a more noteworthy topic than the claimed inadequacy of consumers’ reasoning ability.
Giving away money with nothing expected in return (no goodwill, no marketing opportunity, no data points for research… ahh, but they think they got that anyway…) is a lousy business plan for a for-profit.