Large Numbers Cause Magnitude Neglect: The Case of Government Expenditures

Abstract
Four studies demonstrate that the public’s understanding of government budgetary expenditures is hampered by difficulty in representing large numerical magnitudes. Despite orders of magnitude difference between millions and billions, study participants struggle with the budgetary magnitudes of government programs. When numerical values are rescaled as smaller magnitudes (in the thousands or lower), lay understanding improves, as indicated by greater sensitivity to numerical ratios and more accurate rank ordering of expenses. A robust benefit of numerical rescaling is demonstrated across a variety of experimental designs, including policy relevant choices and incentive-compatible accuracy measures. This improved sensitivity ultimately impacts funding choices and public perception of respective budgets, indicating the importance of numerical cognition for good citizenship.