In behavioral economics, “framing” refers to the ability to influence a decision by describing the same situation in different ways. For example, the perceived value of medical expenditures can depend on whether the results are stated as an increase in the survival rate or a decrease in the death rate.
This morning I was helping a client choose between a 20-year term insurance policy and a universal life policy. After he had eliminated the universal life policy from consideration, he mentioned 30-year term as an alternative. The 20-year term policy cost $6,835 a year, and the 30-year term policy cost $11,485 a year.