No. #23

Money Illusion
- Nominal vs. Real Value Perception

The money illusion refers to the tendency of people to think of currency in nominal, rather than real, terms. In other words, they focus on the face value of money rather than its purchasing power. This can influence how pricing and salary adjustments are perceived by users or employees.

Read more on Wikipedia

Product example

Users may perceive a price as more expensive without considering inflation or the increased value of a product update.

Empathy tips


Adjust for Perception

When adjusting prices or wages, communicate the reasons and context clearly.


Purchasing Power Context

Provide context about the real value or purchasing power of prices and wages.


Educational Content

Offer content that helps users understand economic factors affecting pricing.


User Feedback

Gather user feedback on pricing perceptions to guide communication strategies.

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