The Shock of 9 Quid Ice Cream (2024)

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Have you seen the viral video featuring eight-year-old twins Marnie and Mylah from Burnley, England? The girls were at their local park with their mom, excited for a treat, when they discovered that the ice cream van was charging a shocking £9 for two ice creams. Marnie was particularly upset about the price and provided an economics-induced rant that many of us can relate to.

While it might seem like Marnie’s reaction was all about the high price, there’s a lot more going on here. This situation gives us a perfect glimpse into the fundamental concept of "anchoring" in behavioral economics. It’s a principle that helps explain why we react the way we do to prices and other financial decisions. If you haven’t seen the video yet, you can watch it here:

You can get the general idea of what’s happening, but if you’re not used to young British accents, I've provided a rough translation below:

What is Anchoring?

Anchoring is a psychological bias where we rely too much on the first piece of information we’re given—the “anchor”—when making decisions. Once this anchor is set in our minds, we adjust other judgments around it, and there’s a tendency to interpret new information relative to the anchor in our minds.

For Marnie and Mylah, their anchor came from past experiences with ice cream vans on their street at home. Marnie tells us that “the ones that come to my street have it £1 a piece or £2.” This price range set their expectations and became the anchor by which they judged the new price.

So, when they saw a price of £9, it didn’t just seem high; it was shockingly out of line with their anchored expectations. This led to their strong reaction of shock and disbelief. Their blunt comment, "He’s gonna get nowhere with that," highlights how expectations shape our perception of what is fair and reasonable.

Broader Implications of Anchoring

While our 40 seconds with Marnie and Mylah does a great job illustrating anchoring, this concept extends far beyond an ice cream van in Burnley. We encounter anchoring every day, whether we’re shopping online, discussing salaries, or deciding where to eat.

Take restaurants, for example. When a restaurant features an expensive dish on the menu, it makes everything else seem more reasonably priced. This strategy nudges customers towards pricier items that appear cheaper in comparison.

Retailers use anchoring, too. Stores often display the “original” price alongside the discounted price to anchor customers to the higher amount, making the discount seem like a significant bargain. A dress originally priced at £100 marked down to £50 seems like a great deal compared to if it was just priced at £50 all along. This tactic dramatically influences how we perceive value.

Have you considered buying or selling a home recently? The listing price often serves as an anchor. Even if a house is overpriced, potential buyers tend to negotiate down from the listed price, often paying more than they would if the home were priced more accurately from the start. Similarly, initial salary offers in job negotiations set an anchor. A higher initial offer can shape the entire negotiation, influencing the prospective employee’s expectations and the final agreement.

Final Thoughts

The incident at the park in Burnley isn’t just about kids discovering the harsh realities of inflation; it’s a lesson in the everyday psychology of economics that affects us all. Anchoring, as we’ve seen, is a common behavioral concept that appears in marketing, negotiations, and many other areas of our daily lives. Marnie and Mylah’s reaction to the £9 ice cream is a perfect example of how anchoring shapes our perceptions of price, value, and fairness. By understanding anchoring, we can make more informed decisions in our daily lives.