The Role of Framing in Behavioural Economics

Behavioural economics is a field that combines psychology and economics to understand how people make decisions. It challenges the traditional economic assumption that individuals are rational and always make decisions that maximize their own self-interest. Instead, behavioural economics recognizes that human behaviour is influenced by a variety of factors, including emotions, biases, and social norms.

The Power of Framing

One of the key concepts in behavioural economics is framing. Framing refers to the way information is presented or framed, which can significantly influence how individuals perceive and respond to it.

In other words, the way a message is framed can change people's attitudes and behaviours. For example, imagine you are given two options: a 90% chance of winning $100 or a guaranteed $50. Most people would choose the guaranteed $50 because it feels like a safer option. However, if the same options are framed differently as a 10% chance of losing $100 or a guaranteed $50, most people would choose the 10% chance of losing because it feels like a better deal. This example illustrates how framing can influence our decision-making process. The same information presented in different ways can lead to different outcomes.

The Role of Framing in Decision-Making

Framing plays a crucial role in decision-making because it affects how we perceive risks and rewards.

In traditional economics, individuals are assumed to be risk-averse, meaning they prefer certainty over uncertainty. However, behavioural economics suggests that individuals are not always risk-averse and can be influenced by how information is presented. For instance, studies have shown that people are more likely to take risks when faced with potential losses than when presented with potential gains. This phenomenon is known as loss aversion, and it is a result of how information is framed. When a decision is framed as a potential loss, individuals are more likely to take risks to avoid the loss. Another way framing affects decision-making is through anchoring.

Anchoring refers to the tendency to rely too heavily on the first piece of information presented when making decisions. For example, if you are told that a product costs $100, you may perceive it as expensive. However, if you are first told that the product was originally priced at $200, you may perceive it as a good deal. The initial price presented acts as an anchor, influencing how we perceive the current price.

The Influence of Framing on Consumer Behaviour

Framing also plays a significant role in consumer behaviour.

Marketers and advertisers use framing techniques to influence consumer perceptions and behaviours. For example, they may use positive framing to highlight the benefits of a product or service, or they may use negative framing to emphasize the consequences of not using their product or service. One common framing technique used in marketing is social proof. Social proof refers to the tendency for individuals to conform to the actions or opinions of others. Marketers often use this technique by highlighting how many people have already purchased or used their product, creating a sense of popularity and trust. Another framing technique used in marketing is scarcity.

Scarcity refers to the perception that something is more valuable when it is limited or in high demand. Marketers often use this technique by creating a sense of urgency or scarcity around their products or services, leading consumers to believe they must act quickly before missing out.

The Ethical Implications of Framing

While framing can be a powerful tool in influencing behaviour, it also raises ethical concerns. By manipulating how information is presented, individuals may be led to make decisions that are not in their best interest. For example, marketers may use negative framing to create fear and anxiety around a product or service, leading individuals to make impulsive and irrational decisions. Furthermore, framing can also perpetuate biases and stereotypes.

For instance, if a product is marketed towards a specific gender or race, it can reinforce societal norms and expectations, limiting the choices and opportunities for individuals.


In conclusion, framing plays a significant role in behavioural economics by influencing decision-making and consumer behaviour. It highlights the importance of understanding how information is presented and how it can impact our perceptions and behaviours. While framing can be a powerful tool, it also raises ethical concerns that must be addressed to ensure individuals are making informed and rational decisions.