Magazine : Archives : The Great Ideas Issue

When a Penny Saved is Not a Penny Earned

Here’s a hypothetical question: Would you rather take a job with a $5,000 bonus that would cost an additional $1,000 in transportation expenses, or the exact same job with a $2,000 bonus and save $2,000 in transportation expenses? It’s not a trick question. Professor Eesha Sharma, who studies behavioral economics and teaches marketing at the Tuck School of Business at Dartmouth College, surveyed 268 people online and found that 65 percent were more likely to choose the job with the $5,000 bonus, even though the dollar gain is the same for the two jobs. Why? “They like the end-of-year bonus...