Marketing Letters 14:2, 125–135, 2003

 2003 Kluwer Academic Publishers. Manufactured in The Netherlands.

The Effects of Monetary Magnitude and Level of

Aggregation on the Temporal Framing of Price
JOHN T. GOURVILLE jgourville@hbs.edu
Harvard Business School

Abstract

Existing research has shown that the “pennies-a-day” strategy of reframing a large aggregate expense as a small
daily expense helps to reduce the perceived cost of a transaction (Nagle and Holden, 1995; Price, 1995; Gourville,
1998, 1999). This paper builds on this research and explores the robustness of the phenomenon across two
dimensions – (1) the level of temporal aggregation and (2) the dollar magnitude of the transaction. First, we
show that the effectiveness of a pennies-a-day strategy is not limited to per-day framing. Rather, we find a more
general phenomenon in which a “less aggregate” expense is preferred to a “more aggregate” expense, such that if
a per-day framing is preferred to a per-year framing, than a per-month framing also will be preferred to a per-year
framing. Second, we show that this effectiveness reverses with the magnitude of the underlying expense, such
that while a framing of “$1 per day” is preferred to one of “$365 per year,” a framing of “$4200 per year” is
preferred to one of “$11.50 per day.”

Keywords: temporal framing, pricing, pennies-a-day strategy

1. Introduction

Marketers have long sought to minimize the perceived cost of a product through the tempo-
ral reframing of a large aggregate expense as a small ongoing expense. For instance, many
magazines promote their per-issue subscription price as opposed to their annual subscrip-
tion price, some charities frame their donation requests as “27¢ a day” as opposed to “$100
per year,” and your local health club tells you that you can join for only “$1.50 per day” as
opposed to “$500 per year” – all in spite of the fact that, in each case, the underlying physi-
cal cash flow remains aggregated. Gourville (1998, 1999) has termed this temporal refram-
ing of price the “pennies-a-day” strategy and he and others (cf. Nagle and Holden, 1995;
Price, 1995) find support for its effectiveness in domains ranging from charitable donations
to cellular telephone service to health clubs memberships.
As is made clear in the extant literature, these findings are interesting for at least two
reasons. First, the observed effects of temporal framing violate a basic tenet of rational
decision making – descriptive invariance – which argues that individuals should be indif-
ferent to various framings of the same physical cost (cf. Tversky et al., 1988). The mere
reframing of a transaction from a large, yearly cost to a small, daily cost should have no
impact on behavior without a corresponding change to the physical cash flows. Second,
even if we accept that consumers may not always adhere to the rules of rationality, the
pennies-a-day findings run counter to Thaler’s (1980, 1985) rules of mental accounting,
126 JOHN T. GOURVILLE

which argue that individuals should prefer to aggregate, as opposed to segregate, losses (in
this case, costs). According to Thaler, the psychological impact of many small costs, each
of which is assessed on the steepest part of the prospect theory value function (Kahneman
and Tversky, 1979), should be far more painful than that of a single, aggregated cost.
Nonetheless, academic research and field observations suggest that the pennies-a-day
framing of price can be effective. To explain this effectiveness, Gourville finds that a per-
day framing fosters a favorable comparison to seemingly inconsequential petty cash types
of expenses (e.g., lottery tickets, cups of coffee) and shows that such a comparison often
reduces the perceived cost of the target transaction.
We now expand on this research in two ways. First, the extant literature almost exclu-
sively looks at transactions that can easily be framed in small daily dollar amounts – i.e.,
dollar amounts in the $1 to $2 per day range. In turn, the research overwhelmingly finds
that the framing of a transaction as a small daily expense (e.g., $1 per day for cellular tele-
phone service) is more palatable than the framing of that same expense as a yearly expense
(e.g., $350 per year). But what happens at larger daily dollar amounts? If the framing of a
transaction as “$1 per day” fosters favorable comparisons to inconsequential petty cash ex-
penses, as Gourville suggests, one might expect that the framing of a larger transaction as
“$10 per day” will foster unfavorable comparisons to those very same petty cash expenses,
thus reversing the pennies-a-day effect.1
Some evidence for this reversal can be found in Gourville’s (1998) initial work. In a
charitable donation setting, he found that a request for $1 per day resulted in a higher
likelihood of donation than a request for $350 per year, consistent with pennies-a-day
effectiveness, but that a request for $4 per day resulted in a lower likelihood of donation
than a request of $1400 per year, suggesting a reversal at higher daily dollar amounts.
However, he also found no significant effect for $7 per day versus $2500 per year, calling
this latter result into question. In the present research, we will more closely examine this
potential reversal of the pennies-a-day effect at larger daily dollar amounts.
The second focus of this paper addresses the tendency of the existing research to focus
on the per-day versus per-year framing of an expense as opposed to a “less aggregate”
versus “more aggregate” framing of that expense. Specifically, there is something of a
confound in the results obtained in previous research. It is not clear whether the pennies-a-
day effect is unique to the per-day framing of an expense or is more robust across varying
levels of disaggregation. For instance, while it has been shown that a charitable request for
$1 per day outperforms a request for $350 per year, what might we expect when comparing
requests of $7 per week, $30 per month, and $350 per year? If the pennies-a-day effect is
part of a more general phenomenon, we might expect this effect to manifest itself across
the various levels of disaggregation. But, if the phenomenon hinges on the unique aspects
of a “per-day” framing, it may be limited to per-day disaggregations.

2. Purpose of Study

The present study was designed to explore the robustness of the temporal framing phe-
nomenon across two dimensions: (1) the dollar magnitude of the transaction and (2) the
THE EFFECTS OF MONETARY MAGNITUDE 127

level of temporal aggregation. Our first factor, the dollar magnitude of the transaction, was
manipulated by presenting subjects with a variety of transactions that varied in dollar mag-
nitude, ranging from a donation request of $365 per year and auto insurance at $1200 per
year, to apartment rent of $9000 per year and university tuition of $20,000 per year. If the
effects of temporal framing reverse at increasingly large daily dollar amounts, the range of
transactions employed should capture such a reversal. In particular, we would expect the
previously observed pennies-a-day effect at small daily dollar amounts, but pennies-a-day
“counter-effectiveness” for large daily dollar amounts.
The second factor, level of temporal aggregation, was included to test whether the effects
of temporal framing are unique to per-day pricing strategies or are a more general phenom-
enon. We manipulated temporal aggregation by simultaneously framing each transaction
as a disaggregated (e.g., daily) expense, a moderately-aggregated (e.g., monthly) expense,
and a fully-aggregated (e.g., yearly) expense. We then asked subjects to rank order the
attractiveness or palatability of the three framings for each transaction.
If the effects of temporal framing are unique to a per-day framing, we would expect
the mean subject ranking for the per-day framings to be substantively different from the
mean ranking for either the per-month or per-year framings. Also, we would not expect
there to be a significant difference between the mean ranking for the monthly and yearly
framings. However, if the pennies-a-day effect is part of a more general phenomenon, we
would expect the mean subject ranking to be a progression across the three framings. At
small daily dollar amounts, we would expect a daily framing to be preferred to a monthly
framing and a monthly framing to be preferred to a yearly framing. For high daily dollar
amounts, we would expect the reverse.

3. Study

3.1. Method

3.1.1. Subjects Subjects for this study were 48 students at a major U.S. university who
were approached in a campus cafeteria and asked to fill out a 5-minute survey. Roughly
80% of those approached agreed to participate. Subjects were unpaid.

3.1.2. Stimuli The stimuli for this study consisted of 12 commonplace transactions that
were simultaneously framed as a disaggregated expense (e.g., a daily expense), a mo-
derately-aggregated expense (e.g., a monthly expense), and a fully-aggregated expense
(e.g., a yearly expense). Table 1 presents the 12 transactions and the three temporal frames
employed for each.2 Each subject was shown a subset of six of these transactions and,
for each transaction, was asked to consider the relative attractiveness or “palatability” of
the three framings to a typical consumer. Specifically, subjects were presented with the
following instructions:

Imagine you are in charge of selling a product (e.g., a marketing manager) or re-
laying information about an expense (e.g., a government spokesperson). The costs
128 JOHN T. GOURVILLE

Table 1. Transactions and Corresponding Prices for Disaggregated, Moderately-Aggregated, and Fully-
Aggregated Framings

Transactiona Temporal framing

(n = 24 for each) Disaggregated Moderately-aggregated Fully-aggregated
(i.e., daily) (i.e., monthly) (i.e., yearly)

1. Cable TV service (A) $0.82 per day $25 per month $300 per year
2. Donation request (B) $1 per day $30 per month $365 per year
3. Health club membership (A) $1.50 per day $45 per month $540 per year
4. Off street parking (B) $1.65 per day $50 per month $600 per year
5. Auto insurance (B) $3.28 per day $300 per quarter $1200 per year
6. Weekday lunch (A) $4.00 per day $20 per week $1000 per year
7. Property tax (A) $11.50 per day $350 per month $4200 per year
8. Auto loan payment (B) $11.50 per day $350 per month $4200 per year
9. Apartment rent (A) $25 per day $750 per month $9000 per year
10. House mortgage (B) $49 per day $1500 per month $18,000 per year
11. Federal income tax (B) $58 per working day $288 per week $15,000 per year
12. University tuition (A) $69 per lecture hour $2065 per class $20,000 per year
a Half the subjects saw the transactions marked with an “A.” The other half of the subjects was the transactions
marked with a “B.”

associated with that product or expense may be expressed in many different ways –
some of which may seem more palatable or agreeable than others.
On the next two pages are a series of purchase or expense scenarios that a typical
person might face. Following each scenario are three versions of how that expense
might be expressed. In all cases, the physical payments are identical – the three ver-
sions differ only in how the expense is expressed.
Please indicate which version you think would seem most palatable and which would
seem least palatable to a typical consumer. Please also indicate the degree to which
they seem different.
Each subject was then presented with six transactions, with each transaction presented
as shown in Figure 1. They were asked to rank the three framings in terms of their relative
palatability, with a rank of “1” indicating the most palatable and a rank of “3” indicating the
least palatable. They also were asked to indicate the magnitude of the perceived difference
between the three pairs of framings by circling one of the following – Large, Moderate,
Small, Almost None.3 Subjects were asked to consider only six expenses, instead of the
full twelve, to avoid boredom and to allow the survey to be completed in about 5 minutes.
The twelve transactions were selected to provide (i) a diverse set of commonplace, some-
what familiar transactions and (ii) a full range of per-day price points, ranging from trans-
actions that about $1 per day to transactions which cost $25 or more per day. To allow
for two similar sets of six transactions each, two transactions from each price point were
selected. Therefore, there were two transactions that cost about $1 per day (i.e., cable TV
service, donation request), two transactions which cost about $4 per day (i.e., auto insur-
ance, lunch), and so on. One transaction from each price point was included in each set of
six transactions. In the end, half the subjects (n = 24) saw the transactions marked “A” in
Table 1 and half (n = 24) saw the transactions marked “B.” To avoid order effects, the or-
THE EFFECTS OF MONETARY MAGNITUDE 129

Donation request by public radio

Which request version will be most (= 1) and least (= 3) attractive or palatable to the average consumer:

____$1 per day

____$30 per month
____$365 per year

How much of a perceived difference do you think there will be between the versions (circle one)?

• Between “$1 per day” and “$30 per month”? Large Moderate Small Almost None
• Between “$1 per day” and “$365 per year”? Large Moderate Small Almost None
• Between “$30 per month” and “$365 per year”? Large Moderate Small Almost None

Figure 1. A Sample Transaction and Corresponding Questions.

der of presentation within each set of six transactions was randomized and counterbalanced
across subjects.
Finally, to offset the impact of stylized responses (e.g., always ordering the first, second,
and third framings as 1, 2, and 3), the order of presentation of the three framings within
each transaction was counterbalanced across subjects. Therefore, for those 24 subjects who
saw the transaction “donation expense,” 12 saw the temporal frames presented from least
to most aggregate, as shown in Figure 1, while 12 saw the frames presented from most to
least aggregate.
Several aspects of this experimental design are worth noting. First, unlike previous
work that assessed pennies-a-day effectiveness through transaction compliance, such as a
person’s willingness to donate to a cause, here we ask subjects to report the palatability of
a particular temporal framing of price. While this is an indirect measure of pennies-a-day
effectiveness, we fully expect that framings judged to be more palatable would result in
greater consumer compliance than framings judged to be less palatable. Second, in this
study we asked subjects to indicate the framing that would be most and least palatable to
the “typical consumer.” As such, there may be a concern that subjects are tapping into an
incorrect theory of what others might do. However, the predicted two-way interaction of
framing by transaction magnitude is more complex than would likely be captured by any
simple theory of others’ actions. Thus, we feel comfortable that the experimental design
employed offers a meaningful test of the predicted two-way interaction.

3.2. Results and Discussion

This study was designed to assess the impact of temporal framing on the palatability of
commonplace transactions across a wide range of price points. As per rational economic
theory, given that the three temporal frames within each transaction all represent the same
physical cash flow, no systematic preference for a particular frame should have existed.
Building on the results of Gourville (1998), however, we predict that a pennies-a-day
farming will be effective at small daily dollar amounts, but counter-effective at large daily
dollar amounts. For the transactions with low daily dollar amounts (e.g., cable TV service),
this would imply that the less-aggregate framings should be rated as “more palatable” than
130 JOHN T. GOURVILLE

the more-aggregate framings. And for the transactions with high daily dollar amounts
(e.g., rent), the more-aggregate framings should be rated as “more palatable” than the less-
aggregate framings.
Further, if the effects of temporal framing are robust, these results should hold when
comparing the daily to the monthly framing, the monthly to the yearly framing, and the
daily to the yearly framing. However, if the effects are unique to per-day framings, these
results may not hold when comparing the monthly to the yearly framings.
To test these predictions, we ran three sets of analyses based on subjects’ rankings across
each of the 12 transactions. First, for each of the 12 transactions, we ran a chi-square
goodness of fit test on the “Overall Preferences” across the three temporal frames. Second,
for each of the 12 transactions, we ran three chi-square “Pairwise Comparisons” to assess
the relative palatability of each pair of temporal frames (i.e., daily vs. monthly, daily vs.
yearly, monthly vs. yearly). Finally, to capture the overall pattern of results, we aggregated
across the six small expenses ($4 per day and under) and across the six large expenses
($11.50 per day or more) and performed another round of chi-square goodness of fit tests.

3.2.1. Overall preference For each transaction, we tallied the number of times each
temporal frame was ranked “1,” indicating that a subject thought it to be the most palatable
framing for that expense. For example, across the 24 subjects who saw the transaction “do-
nation request,” the daily frame was ranked first 19 times, the monthly frame was ranked
first 4 times, and the yearly frame was ranked first once, resulting in a tally of 19/4/1.
Similar tallies were obtained for the other 11 transactions and are reported in column 3 of
Table 2.
Using a chi-square test, these tallies were compared to the uniform distributions one
would expect if no particular framing was preferred. For instance, the 19/4/1 distribution
observed for “donation request” was compared to the 8/8/8 distribution one would expect
under the null. In this case, the chi-square test revealed a significant deviation from the
uniform distribution (χ 2 (2) = 23.25, p < 0.001), with a visual inspection revealing this
deviation to favor the daily framing over the monthly and the yearly framing. Similar
chi-square tests were performed for the other transactions and are also reported in Table 2.
These tests revealed a pattern of frame preference consistent with those predicted by
Gourville (1998). In particular, of the six transactions with daily costs of $4 or less, four
displayed a distribution that significantly deviated from chance and that favored a daily
expense framing (χ 2 (2)
9.75, p < 0.01). A fifth transaction (i.e., auto insurance) dis-
played a marginally significant deviation that favored the daily and monthly framings over
the yearly framing (χ 2 (2) = 4.75, p < 0.10), while the sixth (i.e., health club member-
ship) showed a non-significant deviation in favor of the daily framing (χ 2 (2) = 1.75, ns).
The opposite pattern of results held for the six transactions with daily costs of $11.50
or more. Four of these transactions displayed a distribution that significantly favored the
yearly framing (χ 2 (2)
10.75, p < 0.01). A fifth transaction (i.e., apartment rent) dis-
played a marginally significant distribution that favored the yearly framings (χ 2 (2) = 5.25,
p < 0.10), while the sixth (i.e., auto payments) displayed a marginally significant
distribution that favored both the yearly and monthly framing over the daily framing
(χ 2 (2) = 4.75, p < 0.10).
THE EFFECTS OF MONETARY MAGNITUDE 131

Table 2. Tests of Preference Across Temporal Frames

Chi-square goodness of fit testsa

Pairwise comparisons
(1) (2) (3) (4) (5) (6)
Transaction Disaggregated Overall test of Small vs. Medium vs. Small vs.
price point preference medium large large

1. Cable TV $0.82 14/9/1 15/9 22/2 23/2

service 0.005 ns 0.001 0.001
2. Donation $1.00 19/4/1 20/4 19/5 23/1
request 0.005 0.005 0.005 0.001
3. Health club $1.50 11/7/6 15/9 18/6 18/6
membership ns ns 0.05 0.05
4. Off street $1.65 19/5/0 19/5 23/1 24/0
parking 0.001 0.005 0.001 0.001
5. Auto $3.28 10/11/3 13/11 20/4 20/4
insurance 0.10 ns 0.005 0.005
6. Weekday $4.00 13/10/1 14/10 22/2 23/1
lunch 0.01 ns 0.001 0.001
7. Property $11.50 0/5/19 8/16 5/19 2/22
taxes 0.001 0.10 0.005 0.001
8. Auto loan $11.50 3/11/10 9/15 14/10 13/11
payment 0.10 ns ns ns
9. Apartment $25.00 4/7/13 12/12 9/15 9/15
rent 0.10 ns ns ns
10. House $49.00 2/7/15 11/13 9/15 8/16
mortgage 0.01 ns ns 0.10
11. Federal $58.00 1/6/17 9/15 7/17 6/18
income tax 0.001 ns 0.05 0.05
12. University $69.00 3/5/16 9/15 7/17 9/19
tuition 0.005 ns 0.05 0.005

a Data in columns 3–6 represent the distribution of outcomes (e.g., 19/4/1), the direction of the outcome
(e.g., ), and the level of significance for the distribution as per a chi-square goodness of fit test (e.g.,
0.001).

3.2.2. Pairwise comparisons While this first set of tests support the predicted framing
by transaction magnitude interaction, additional insight can be gained by looking at the
pairwise attractiveness of the three temporal frames.
Of particular interest in these analyses is the monthly versus yearly pairwise compar-
isons. While Gourville (1998) provides a rationale as to when and why a daily framing
might be preferred to a yearly framing, his framework makes no prediction on what should
happen when comparing monthly to yearly. Is pennies-a-day effectiveness driven by hav-
ing a less-aggregate versus a more-aggregate framing, or is there something unique about
the per-day framing?
To answer this question, consider the three framings for the transaction “donation re-
quest.” If a particular individual ranked the daily, monthly and yearly framing for this
transaction as 1, 3 and 2, her pairwise rankings would have daily preferred to monthly
132 JOHN T. GOURVILLE

(i.e., daily ranked “1” vs. monthly ranked “3”), daily preferred to yearly (“1” vs. “2”) and
yearly preferred to monthly (“2” vs. “3”). Following this method and tallying up across
those subjects who were presented with the transaction “donation request,” we find that a
significantly greater number of subjects ranked the daily framing as more palatable than
the monthly framing than vice versa (20 vs. 4; χ 2 (1) = 10.67, p < 0.005). Similarly,
a greater number of subjects rated the monthly framing as more palatable then the yearly
framing (19 vs. 5; χ 2 (1) = 8.17, p < 0.005) and the daily framing as more palatable
than the yearly framing (23 vs. 1; χ 2 (1) = 20.17, p < 0.001). Similar tests for the other
transactions were conducted and are reported in columns 4, 5, and 6 of Table 2.
Several results emerge from these pairwise analyses. First, for the six transactions with
small daily dollar amounts ($4 and under), the effect of temporal framing is robust across
the three pairwise comparisons. Across the 18 pairwise chi-square tests (6 transactions ×
3 pairwise tests each), 14 revealed a significant preference for the less-aggregate over the
more-aggregate framing. Another three tests, while not significant, were in the right direc-
tion. And the final test revealed no distinct preference pattern (with a split of 13/11).
Second, for the six transactions with large daily dollar amounts ($11.50 or more), the
counter-productivity of temporal framing also was evident, although not as robust. Across
the 18 possible chi-square tests, 6 revealed a significant preference, 2 revealed a marginally
significant preference, and 6 revealed a non-significant preference for the more-aggregate
over the lessaggregate framing. However, 3 tests revealed no distinct preference pattern
(with a split of 11/13, 12/12, or 13/11) and 1 test revealed a non-significant preference in
the opposite direction.

3.2.3. Aggregate pairwise comparison Given these varying results, our final set of
analyses looked to capture the meta-effects of temporal framing and transaction magni-
tude across the 12 transactions. In particular, while the 36 separate chi-square tests (i.e.,
12 transactions × 3 pairwise tests) offer a promising pattern of results, it would be nice to
show these same results at a more aggregate level. Toward this end, we collapsed across the
small transactions and conducted three pairwise chi-square tests. Similarly, we collapsed
across the large transactions and conducted another three pairwise tests. While we had not
predicted a priori where the split between small and large transactions might fall, it was
quite obvious from the first two sets of analyses that those transactions costing $4 per day
or less led to very different rankings that those costing $11.50 per day or more. This led to
six small transaction and six large transactions.
Using this delineation, we again found the predicted pattern of results. As shown in
Table 3, across the six small transactions, subjects’ rankings significantly favored the daily
over the monthly framing (96 vs. 48; χ 2 (1) = 16.00, p < 0.001), the monthly over the
yearly framing (124 vs. 20; χ 2 (1) = 75.11, p < 0.001) and the daily over the yearly
framing (131 vs. 13; χ 2 (1) = 96.69, p < 0.001).
In sharp contrast, across the six large transactions, the rankings were less favorable for
the daily than for the monthly framing (58 vs. 86; χ 2 (1) = 5.44, p < 0.02), less favorable
for the monthly than for the yearly framing (51 vs. 93; χ 2 (1) = 12.25, p < 0.001),
and less favorable for the daily than for the yearly framing (43 vs. 101; χ 2 (1) = 23.36,
p < 0.001).
THE EFFECTS OF MONETARY MAGNITUDE 133

Table 3. Aggregated Test of Preference Across Temporal Frames

Transaction Chi-square pairwise comparisons

Small vs. medium Medium vs. large Small vs. large

Small transactions 96/48 124/20 131/13

($4 per day or less) p<0.001 p<0.001 p<0.001
Large transactions 58/86 51/93 43/101
($11.50 per day or more) p<0.02 p<0.001 p<0.001

4. Discussion and Conclusions

In attempting to extend the findings of Gourville (1998), the current research allows for
several broad conclusions. First, quite clearly, the effects of temporal framing are mod-
erated by the monetary size of the transactions. In this research, transactions that could
be framed as $4 per day or less all benefited from a pennies-a-day pricing claim while
more substantial transactions that required a framing of $11.50 per day or more generally
were harmed by a pennies-a-day claim. Combined with the findings of previous research
(e.g., Nagle and Holden, 1995; Price, 1995; Gourville, 1998, 1999), it appears safe to say
that a pennies-a-day strategy should improve the attractiveness of transactions at low price
points, but prove counterproductive at high price points.
In this regard, it is interesting to note that the inflection point for the college students
used in this study was somewhere between $4 and $11.50 per day. One could speculate
how this inflection point might vary across consumer segments as a function of the types of
expenses that segment is regularly exposed to. For a college student, whose typical daily
expenses may be in the $1 to $3 range, $10 a day may seem like a daunting sum, leading
to the observed inflection point. However, for an accomplished business person, $10 per
day may still be considered “petty cash,” leading to a much higher inflection point. This
possibility deserves attention.
Second, and perhaps more interesting, it appears that the effects of temporal framing are
not limited to per-day pricing claims. Rather, as can be seen in Tables 2 and 3, a general
pattern emerges in which a less-aggregate framing is preferred to a more-aggregate fram-
ing for small dollar amounts and a more-aggregate framing is preferred to a less-aggregate
framing for large dollar amounts. Thus, in the same way that “$1.65 per day” for parking
sounds like a better deal than “$50 per month” for parking, so “$50 per month” for parking
sounds like a better deal than “$600 per year” for parking. This result suggests that the
widely observed pennies-a-day pricing strategy is but one example of a broader phenom-
enon in which the attractiveness of a transaction is impacted by the relative aggregation
of its price. As a result, the effects of temporal framing appears to be more robust than
originally perceived.
This aggregation result leads to several avenues for future research, the first of which in-
volves boundary conditions. While our study employed fairly natural levels of aggregation,
such as per-day, per-month, and per-year, it is not clear how the observed results would ex-
tend to less natural levels of aggregation. For instance, would a per-hour or per-minute
framing of price be deemed more attractive than a per-day framing of price? Similarly,
134 JOHN T. GOURVILLE

would a multiyear framing make an unattractive transaction seem even more unattractive?
Given the potential artificial nature of such framings, we question whether they would fol-
low the pattern found in this paper. It may be that the reframing of price is effective only
to the degree that a consumer “buys into” that framing as a reasonable manner in which to
think of that price. Obviously, more research is required to sort out such issues.
Another avenue for future research has to do with a potential confound in the current
study. We note that many of the small transactions we employed are typically disag-
gregated in everyday life, such as in the case of buying lunch. Similarly, most of the
large transactions we employed are typically aggregated, as in the case of university tu-
ition. Therefore, it is unclear whether consumers truly prefer a less-aggregated to a more-
aggregated framing of a particular transaction (or vice versa) or merely the prototypical
framing of payment for that transaction. Along these lines, it could be that consumers
prefer to think about university tuition as costing $20,000 per-year because that is the way
they have always thought about it.
In response, we offer two thoughts. First, even if a consumer prefers a particular level
of aggregation because it is more common, it does not necessarily negate the explanation
for pennies-a-day effectiveness presented here. Rather, it may be that a dominant payment
method has arisen because of its relative palatability. For instance, the fact that the market-
place has deemed that lunch is paid for daily and that tuition is paid for annually may not
cause those framings to be more palatable, but may be due to those framings being more
palatable. Second, even when we eliminate the dominant payment schedule from each of
our analyses, we find evidence of temporal framing effects. For instance, given that cable
television typically is paid for monthly, it may not be surprising that most people prefer
the monthly to the yearly framing of price. However, we also find evidence of pennies-a-
day effectiveness when comparing the daily to the yearly framing of price, two temporal
frames not often applied to cable television service. Nonetheless, more research is needed
to more clearly disentangle this potential confound.
Finally, in this paper, we have built upon Gourville’s (1998) original explanation for
pennies-a-day effectiveness, an explanation that hinges on the favorability of comparisons
that a particular framing brings to mind. While the current results are consistent with such
an explanation, more work needs to be done to assess this underlying behavioral mecha-
nism. For instance, recent research by Chandran and Menon (2002) on the temporal fram-
ing of health risks found that the per-day framing of a health risk (e.g., death from smok-
ing) fostered perceptions of a near-term threat, while the per-year framing of that same
risk fostered perceptions of a distant threat. While it is not clear how such a mechanism
could explain the reversal of pennies-a-day effectiveness at large daily dollar amounts, it
does suggest that the underlying mechanisms driving pennies-a-day effectiveness deserve
further attention.

Notes

1. Note that the preference for an aggregate framing over a daily framing at larger daily dollar amounts would be
consistent with Thaler’s (1985) rules of mental accounting. Specifically, Thaler argues that in the domain of
losses (in this case costs), individuals should prefer to aggregate as opposed to segregate those losses.
THE EFFECTS OF MONETARY MAGNITUDE 135

2. For simplicity, we shall refer to the disaggregated framing as the “daily” framing, the moderately-aggregated
as the “monthly” framing and the most-aggregated as the “yearly” framing. Note, however, that the auto
insurance, weekday lunch and university tuition transactions deviated slightly from this structure.
3. Analyses were conducted with and without these “Almost None” cases. While the analyses reported here
include these cases, the analyses that exclude these cases are not substantively different.

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