Musings of a Math Major

[madbaker]

This came to mind as I was paying the CA math tax yesterday

(Which is what we call the lottery - the expected return is negative regardless of how much you spend on it - so it's a tax on people who can't do math. So what's my excuse? Er, um, moving right along...)

My credit card has a "reward" program. Accumulate points for charging on the card. At designated levels you can redeem them for prizes, temporary lower rates, etc. I usually go with a department store gift card.

I don't get 1) how they set the levels; 2) how people evidently respond illogically to the levels. Here are the levels and gift card amounts -

3000: $25
5000: $50
10,000: $100
20,000: $125
35,000: $300
50,000: $450

Think about this for a moment. I usually redeem at the 10K level. Double the points and you get... not double the gift card, but 25% more. The other levels, except for 5K, are similarly assymetric.

The best part about this: there is no limit to the number of times you can redeem for a given reward. So I wait until I've accumulated 10K, get my $100 card, then do the same next time.

Why would you ever not do this?

I guess we math majors are just too logical for the marketing types.