Nominal Illusion: A Mistake or a Choice?

When Betsey got home from her morning run earlier this week, she beamed and told me she had covered eight kilometers. And this Sunday, after running the first two hours of my long weekend run, I gritted my teeth and told myself, “only five miles to go.”

The strange thing about these observations is that I’m an Aussie, and so typically talk in kilometers, while Betsey grew up in the United States, speaking in miles.

Why did we reverse roles? It turns out we were in very different situations. When I asked Betsey about her comment she said that, ” … measuring my run in kilometers makes it sound like I ran farther.” And this seems like something we may want to do once we are done jogging. In turn, I was still running when I described the last eight kilometers as five miles, and I did this because I was trying to convince my body that it didn’t have that much further to go.

Economists have long thought about nominal illusion — the tendency for certain magnitudes to sound different when described in different units. For instance, a boss offering a two percent pay raise in a year in which inflation is six percent faces fewer protests than when cutting your wage by three percent in a year with one percent inflation. Yet the two situations are equivalent: your boss cut your real wage by four percent.

I had always thought about nominal illusion as simply being a mistake, or a math error. But what I learned when thinking about the jogging example is that sometimes we purposely manipulate the units with which we describe the world to make ourselves feel better.

But the economist in me finds it surprising that nominal illusion works. When I told myself that I had five miles left to run, I actually looked at my fancy G.P.S. watch, which told me that I had eight kilometers left to run, and then did the math to convert this to five miles. So I both knew that I had eight kilometers left, but fooled myself that it was “only” five miles.

Can we systematically fool ourselves in this manner? And if so, why can’t I use nominal illusion to make myself feel really terrific? For instance, if I convert my salary to the Laos Kip, then it sounds like I’m super-rich. But somehow my ability to harness nominal illusion around these bigger issues fails me. Each of us can fool ourselves some of the time, but why can’t we fool ourselves all the time? And why can we sustain comforting nominal illusions in some domains, but not others?


I recommend reading Orwell- the master of the social effects of nominal illusion


I think its a combination of many things, for one thing, like you said, 8 is bigger than 5. But there is also the name of the unit. Miles can only invoke one thing: miles. While on the other hand, the word kilometers implies other things to our subconscious. The word "kilo" in our common psych can be translated as: a lot.

If you were to replace, for example, the word kilometers for let's say "chichis", 8 chichis vs. 5 miles doesn't sound so big anymore.

Words account for quite a bit. Salesmen can use this to their advantage. This way 99.99 dollars sounds more than 100 bucks. Five thousand big ones sound more than 5 g's.

As for your salary, if you take the laotian kip (I actually don't know what the rate is) and your salary turns into something ridiculously big, then it may well be that you've gone past a quantity which your mind can no longer visualize. In other words, let's say you're salary is 758 568 679$, it really doesn't differ from say 546 987 439$. Ronald Reagan mentioned in his autobiography that when giving speeches, people reacted much more to numbers in the hundreds of thousands rather than in the hundreds of millions.

I can actually relate to this. As a Canadian who did a lot of cross-border shopping into the U.S. at a time when the Canadian dollar was worth about 70 cents U.S., walking into a Wal-Mart, every price always used to seem so cheap (3.99 instead of 5.99$ wow!), everything was a deal and I had to constantly do the conversion with my cellphone calculator... try converting your salary into some currency which is only slightly lower than the USD (Australian dollars?). I'll bet you'll feel richer right away.




I could have been more precise, but I assumed that the word "print" would convey that we're talking about "fiat currency", which only the govt can issue.

The use of credit cards, even granting that it's the same as creating fiat money, does not cause systemic inflation, does not act to decrease overall wages in real terms.

In any case, I hope you're not defending the proposition that because his real pay was cut by inflation, that somehow his boss did the cutting. That's the notion I was objecting to.

US soldier

As a soldier who is deployed for 15 months, I would much rather hear about it in terms of months rather than the 455 day tour overseas. We regularly joke about the next 10 months; or vice versa the next 300 days, depending on our mood of course.


I find it helps me get out the door in time for my train if I set my clocks 2 or 3 minutes fast. Any more than that and I mentally adjust the displayed time back to the real time and I dally too long.


Re: Post #5

Admittedly, I'm no expert when it comes to the stock market, but it seems logical to me that stock splits are a good thing. To use DK1's example: If you have stock at $10 per share and it splits, you have two $5 shares...Let's say the price goes up $2 per share. Now you have 2 shares worth $7 each (total value: $14) as opposed to a single share worth $12.

Am I missing something here?

Jesse D.

The piece that strikes me here is 'equivalent' exchanges. We recognize and accept conversions like:

- Miles to Kilometers (fixed measurable units)
- Change the clock (same real time, same rate)
- Salary gains and losses (add and subtract #'s)

In daily life these things come up, some more often than others. When I convert these I have a sense of what I'm doing - and what the result is.

Secure in my knowledge of conversion rates or identical equations, I am free to focus on other factors that catch my interest. Low/high number, quick/slow rate, accurate time or time to spare.

Perhaps if I were used to trading in Laos Kip, I could more easily believe myself rich by the conversion.

I'd have a sense of what I was doing, and be free to focus on creating the view that worked best for me at that moment.

Nick Kong

Not that I don't like your post, but can you extrapolate this into a larger context? Perhaps, talk about the current economic situation?


Re Mack #30

For over 50 years now in this country, a large portion of the populace has been able to create the equivalent of "fiat money". The vehicle: credit cards.

e. thomas fuller

you may have it backwards. by riding a bicycle, or running ( why run? ) along a road where distance is measured in klicks ( italy! ) you rack up higher totals ( 8 > 5 ) and your accomplishment accrues at a faster rate and to a higher total.

once you've tried this in italy you will likely realize that going fast or far is not meaningful and things like 'nominal illusion' can then be turned over to others for safekeeping.


The term "nominal illusions" could also be applied to the spinning of statistics and ignoring the bad information we don't like.

As an engineer, I detest "nominal illusions" in your sense as the system of measurement we use on a day to day basis is rife with them.

The British unit system we use has a ridiculous number of measures for the same base value, simply to make a nominal conversion. Just for power/energy - we have horse power, torque, joules per second, watts, ft pound force per second, BTU/hour, refrigeration tones. Every single one measures the same exact principle of energy - what is the simple watt in the metric system. Each derivation puts the unit in understandable terms - a car with 200 hp is much more relatable than one capable of producing 508,885 BTU/hour, even though energy is energy for all practical reasons.

It's archaic - with pure the metric system all you have to do is multiply or divide by 10 to get a meaningful scale. Heck, NASA had a Mars satellite fail a few years back because of a screw up in converting the different versions of energy units between British and Metric (an argument that didn't seem to sway my heat transfer professor on a test of mine).



I think it's kind of like having a few beers...
I LIKE to feel a lil foolish some times but I wouldn't want to feel that way all of the time.

I fool myself in the short term (I do the KM to Miles thing too) to attain short term goals but I find that fooling myself long term does not help me attain long term goals.

Ira Yermish

Following the running issue ... I run marathons and particularly enjoy running them in Europe or Canada (for a number of reasons). But running the kilometers is more fun because they click off faster which gives one more opportunities to track progress. It does take me the same time to run 26.2 miles as it does to run 42.2 kilometers.


"Full Half-Quart size"
Or there's the "double quarter pounder" at McDonalds.

Another common one: The energy value of food. Energy we don't want is measured in calories and energy we do want is measure in kilojoules, which is a smaller unit.

Here in Adelaide a lot of the main N-S-running roads are set 1-mile intervals, though most people don't notice it. So occasionally I will speak of a distance in miles if I'm travelling W-E.

Biologist Stephen Jay Gould wrote an essay about chocolate bars shinking while the price stayed constant, then they introduced some Super variety around the size of the original.


what about stock split making a share more affordable? I can't afford a share of BRK-A. Does a stock split try to attract a specific type of investor?


The salary vs miles to go observation is really the key. In the "miles to go" scenario, you're measuring a subjective quantity that is essentially only monitored by you. However even if you calculate your salary in Laos Kip, your purchasing power is still fixed at what ever it was. So when you take your Laos Kip salary to the car dealer, grocery store, etc... its obvious what will happen.

The crux is that you can't fool your self when there are external measures for you to reference against. If it was all subjective (and only up to you for measurement), you might as well do it in astronomical units. I only have .000000053AU's to go. I'll be done in no time.


I wanted to lose weight so I began measuring my weight in stones. I've never been in such good shape!


When I have to leave the U.S. for a long period of time --let's say 4 months--I then would think of it as I would be gone for only 120 days, instead of saying I would be gone for 4 months. Then at the end of a long trip I would say, Oh I have only 30 days (yeah!) then I would be home. If I said in a month I would be home, it sounded longer.


Justin, the illusion is that you think you still think and talk like an Australian !

"done jogging" "a math error" "did the math" ?

Please, if you were still Australian, that would be "finished jogging", "a maths error", and "did the maths". I'll forgive the spelling of kilometre - I'm sure the publisher controls that.


Dr HumblerNow

I fooled myself for decades by telling myself I could drink any number of alcoholic drinks, so long as I got up in the morning and went to work -- work hard, play hard, so to speak. Mercifully, I finally discovered that the reason my relationships, work outputs and finances were problematic had less to do with my family and spouse, supervisors and the global economy, and more with my own drinking habits. My nominal illusion was that I could drink with impunity; when in reality I am really an alcoholic. Now, three years clean and sober, I look back and am grateful to be re-discovering who I really am, and life is better. A derivative of Whitehead's fallacy of misplaced concreteness in action, I guess.