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Parshas Shoftim - The "Left Digit Effect"           5 Elul 5781

08/12/2021 07:34:30 PM


Have you ever noticed how some stores mark the price of their goods with a “$” sign while others don’t? This is not by accident. In fact, the decision to include or not include that little symbol makes a big difference. Over the past few years, pricing analysis specialists have determined that it’s far more effective to price goods without the iconic dollar symbol. It seems that when a currency sign appears with the price, we automatically connect it to our very own hip pockets or purses–and what is or isn’t inside there–leading us to believe that the item in question is more expensive than it actually is, meaning that $5 isn’t always $5 in our emotional thinking.

Similarly, if an old sales gimmick is to be believed, 1 cent can be perceived to be worth a lot more than 1 cent. We’ve all seen signs selling items for, say, $4.99, rather than $5.00. That’s because we tend to think of $4.99 as being more closely related to $4 than $5. Professor Robert Schindler, a marketing professor at Rutgers Business School, conducted a study of a women’s clothing retailer. He found that the 1 cent difference between prices ending in .99 and .00 had “a considerable effect on sales”, with items whose prices ended with .99 far outselling those ending with .00.

The 99-cent concept has been around for decades. David Gold and his wife started the 99 Cents Only stores in 1982. There are now nearly 280 branches across California, Nevada, Arizona, and Texas, and the chain was sold last year for $1.6 billion. But perhaps even more pertinent to this idea is how Steve Jobs managed to wrest the music industry back from file-sharing free downloaders with his 99-cents-per-song iTunes strategy. It made music so cheap almost everyone could afford to buy their favorite tune without causing too much pain in the pocket.

According to a study conducted by Kenneth J. Wisniewski from the University of Chicago, when the price of margarine dropped from 89 cents to 71 cents at a local grocery chain, sales improved by 65%. But when the price fell two cents more to 69 cents, sales jumped by an astounding 222%! Two pennies are worth a lot.

This method of not pricing items in round numbers is also called "Odd Pricing" — referring to the resulting odd price numbers like 69 or 99 cents. The practice of odd pricing has been used for more than a century. It's trackable as far back as 1875. At that time, a paper called the Chicago Daily News was founded. It sold for one cent. The problem was there weren't enough pennies in circulation. So, the owner of the newspaper went to the retail stores who advertised in his paper and asked them to lower the prices on their goods by one cent. The merchants agreed to help the paper out. Then the newspaper owner had barrels of pennies shipped in from Philadelphia to provide the circulation of change.

Every industry brings its own rules and nuances that the consumer does not realize what goes into the product. As many of you know I am now selling my second book in addition to the first one. Here, too, in the book industry pricing is a critical part of promotion and book sales. The price of a book is influenced by factors such as size, graphics, and content. Without going into detail, we priced the second book two dollars more than the first. The concern was not only the two-dollar differential;  it changed the left digit from a one to a two, namely charging 21.99 up from 19.99. The bigger issue I have encountered is the guilt I feel when I do not have exact change. Without fail when I tell  customers, “I owe you X,” they reply, “Don’t worry, keep the change,” or even worse, ”Put the change in the Tzedaka box.” Either way, I have concluded that there is a tinge of false advertising connected to all of this which can be interpreted as “a bribe” -  not in the technical sense, but in knowing customers will readily forego the few pennies. There has been occasion where a person gave fifty dollars for the two books and said, ”Keep the change.” As I said, it may not be a genuine violation of bribery, but I feel the spirit of the law is definitely being challenged. Perhaps I can explain why this may be so.

In this week’s Parshas Shoftim the Torah says in Devarim 16:19 "לא תטה משפט לא תכיר פנים, ולא תקח שחד כי השחד יעור עיני חכמים ויסלף דברי צדיקם"  “Do not bend justice and do not give special consideration [to anyone]. Do not take bribes, since bribery makes the wise blind and perverts the words of the righteous.” Reb Eliyahu of Vilna (Vilna Gaon) asks why does bribery potentially blind the wise, while in Parshas Mishpatim the Torah says in Shmos 23:8 "כי השוחד יעור פקחים"  “bribery blinds the clear sighted”? The Gr”a explains there are two necessary components to a judge and a Torah scholar. The first, is that a person needs to be wise to understand the laws on their own merits. The second is that a wise person must know the laws of business, transactional, buying, selling, and the shrewdness of man. This is necessary to understand the cunningness of man, to understand, perceive, and see deceit to protect the innocent. The Chacham/wise is related to the Torah while Pikeiach/clear-sighted is knowing the nature of mankind. The Torah points out the power and influence of “shochad/bribery” can have on both the wise and the clear-sighted individuals and blind them from the truth. Reb Bunim of P’shischa follows this with an explanation on the very next passuk with the words צדק צדק תרדוף   “Pursue perfect honesty”; leave no room for deception in business.

Although undercharging and receiving more may (or may not) fall under the category of ‘overcharging’, it is not the classical case. When it comes to many of the monetary and business laws of the Torah, we may not be in violation of the actual statute, but we may nevertheless be in violation of the spirit of the law. The spirit of the law is summed up by the directive of pursuing perfect honesty. Honesty is honesty, but perfect honesty is that element of the spirit of the law.

As we find ourselves going through the month of Elul, a time of introspection and review, we should take note and be extra careful in all areas regarding the basic laws and even the laws that may not pass the test of the spirit of the law. If we take the high road and go above and beyond the letter of the law while also maintaining the spirit of the law, then the Ribono Shel Olam will give us special consideration in reviewing our charges as well.

Ah Gutten Shabbos

Rabbi Avraham Bogopulsky

Wed, January 19 2022 17 Shevat 5782