Logarithmic Thinking - Part 2
In one of my recent blogs on logarithmic thinking , I had pointed out how research indicated that people who did not know the concept of numbers (like some tribes) and kids who had not yet been taught numbers at school think of numbers in relative terms, as ratios, and not in absolute terms. At that time, I thought the rest of us who have been taught numbers think in absolute terms, not logarithmically (not in ratios). I realized I was wrong when I was reading Dan Ariely’s blog on diminishing sensitivity. Diminishing what, you ask? Well, think of how you argue with the subzi wallah when he charges Rs.10 more than earlier times. But you don’t get all worked up if that expensive restaurant down the road increases the price of their dishes by Rs.10. Ariely’s point is that it is the same Rs.10 in both cases: so why do you not care equally in both cases? The answer is diminishing sensitivity: you don’t look at Rs.10, the absolute number. Instead you compare Rs.10 with the price ...