#Shrinkflation! A bite missing?

While the price of a Toblerone bar has not changed in recent years, its size has—between 2009 and 2010, a standard bar became 30g lighter (from 200g to 170g), and by 2016 it had shrunk to 150g. Many other products are also shrinking.

Shrinkflation matters

• it's an effective way of passing-on costs to consumers
• it should be considered in damages lawsuits that quantify pass-on to consumers
• it's already led to class action lawsuits in the USA
• it should be picked up by inflation statistics

Why is shrinkflation effective?

Consumers pay less attention to size than price:

• people have limited cognitive power and use it only where necessary
• people often display representativeness bias, whereby they only focus on one salient dimension (e.g. price) that they consider to be representative of the whole product

But shrinkflation can backfire if consumers feel deceived or see it as unfair.

So what?

The world has woken up to #shrinkflation. Chocolate bars are getting smaller.

Behavioural economics shines a light on why shrinkflation is effective. Importantly, it also shows how shrinkflation might backfire.

Legal cases that consider the pass-on of input costs to end-consumers will need to consider not only how cost shocks are passed on to prices, but also how they manifest themselves in reduced consumption through shrinkflation.

Read more...

See our full article on #shrinkflation here

We've got three more articles touching on behavioural economics this month, see them here