First came Girl Dinner, then came Girl Math. It would have been hard to have missed the monumental rise in the internet trend, “Girl Math”. The tongue-in-cheek trend describes a set of rules which some women on the internet have claimed help them to justify purchases. The trend is an interesting perspective into how many people share similar thought processes when making decisions around consumption.
What does that have to do with Economics?
Behavioural economics is the field of economics concerned with the study of people and their decision-making. In economics, humans are generally assumed to be rational, utility-maximising agents. In behavioural economics, researchers acknowledge human flaws and how their decisions vary from the expected. The tropes of Girl Math are excellent exhibitions of some of the biases and behaviours that various economists have studied over the years. The trend is light-hearted and, despite the name, by no means is irrational thinking exclusive to women. The fact is we all suffer from cognitive biases and irrational decision-making. This is exactly what motivated Behavioural Economists to study this discipline. Let’s look at some examples.
Paying in cash? That purchase is free.
This Girl Math trope claims that something paid for with cash doesn’t count as money spent. Indeed, a survey by CreditKarma (2023) found that one in five members of Gen-Z surveyed said they are using cash more often because “it feels like free money”. How does this compare to economists’ findings? At first glance, it appears to disagree with a commonly known bias called the “cashless effect”: people are generally more willing to pay when physical money is not involved in the transaction. Soman (2001) attributed this tendency to the fact that paying with a card is less transparent than paying with cash, where some element of mental math is required. So, why do Gen-Z disagree? The answer is likely found in the “Pain of paying”. This term describes the guilt consumers feel when parting with money. Research suggests that when we purchase items that are difficult to justify, we typically pay with less-trackable methods i.e. cash, to forget this guilty purchase. Cash allows us the ability to forget transactions by removing them from our bank statements. This also helps to explain other commonly quoted girl math formulae, such as “paying from a gift card is free”.
Cost per-use
Want to make a significant purchase? Girl Math circumnavigates hefty price tags using what behavioural economics would call the framing effect. A £300 jacket? Using girl math that’s under a pound a day, for a year. The framing effect allows sub-optimal options to be framed in a positive light. The term is most commonly attributed to Israeli economists Tversky and Kahneman, often considered the fathers of behavioural economics. In their seminal 1985 paper, the economists presented individuals with a hypothetic decision between two treatments for a town of 600 overrun with a deadly disease. Option A would save 200 people guaranteed. If B was adopted, there was a one-third probability that 600 people would be saved and a two-thirds probability no one would be saved. They then asked respondents to choose between two treatments again. If A was adopted, this time 400 people would die. If B was adopted, there was a one-third probability no one would die and a two-thirds probability everyone would perish. Notice that outcomes for each option are identical across rounds, just framed differently. In the first decision, most people choose A. However, in the second, the majority choose option B. This displayed how choices can be altered just by changing the framing of the information.
Heuristics and bias
Overall, many characteristic trends in Girl Math can be identified as Heuristics. Popularised by Kahneman and Tversky, the term describes mental shortcuts used to problem-solve and make decisions. Heuristics are the rules of thumb and generalisations that allow us to make choices avoiding complex mental gymnastics.
Girl Maths is just more proof that we all have ways of making decisions, which are not always optimal. As the field of behavioural economics develops and grows, understanding humans' unique behaviour can help policymakers design and impose more effective policies for the benefit of society.
Article by David Carver
Edited by Lara Gigov (Editor-in-Chief)
Bibliography
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