I just booked a flight with points and it reminded me how virtual currency can alter our feelings and decision making. Whether we’re talking about a rewards program or monetary exchange, separating the currency from a dollar value can be a powerful framing tactic.
When multiple units of virtual currency are assigned to a single dollar it can inflate the amount of value we perceive. Getting 100 points for every dollar spent seems better than 10 points even if they possess the same purchasing power. This phenomenon is the crux of why virtual currency alters our spending behavior.
Here’s a few behavior changes I’ve noticed when I’m dealing with points instead of dollars:
The inflated perception virtual currency inspires can change spending allocation. …