The rewards program’s rules are quite complex: The legal language runs about five times longer than this article.

Briefly, customers earn credits by spending money. Each dollar spent on food or drinks earns one star. However, preloading money onto a Starbucks gift card or mobile app earns two times the stars.

Stars can then be spent on drinks, food or merchandise. Under the current program, the simplest and cheapest reward, for 25 stars, is adding a free shot, dairy substitute or flavoring to a drink. The highest cost items, for 400 stars, are merchandise, like a branded cup or a bag of ground coffee.

Starbucks announced changes to the terms and conditions of its rewards program in December, adjusting the “price” for some of its items.

The change that received the most attention was that the cost of a cup of plain hot coffee or tea would double from 50 stars to 100.

At first glance, Starbucks’ modification to its rewards program might be perceived as bad for consumers. But there is more to this change than meets the eye. What went less noticed is that the company is also lowering the price to get a free iced coffee or tea from 150 points to 100.

To an unsuspecting consumer, the points reduction for iced coffee may not mean as much against the points increase for hot coffee. The coffee business, however, has radically changed over the last few years. The change is best summarized by a recent New York Times headline, “Does anyone drink hot coffee anymore?” Iced or cold-brewed coffee is now the rage – even in winter – and growing quickly. Cold beverages have accounted for at least 60% of Starbucks’ total sales every quarter since early 2021, thanks in part to the popularity of iced drinks among Gen Z customers.

This means that for a large share of Starbucks customers, one part of the rewards program is actually getting more generous.

So why the uproar, if one of the more popular items on Starbucks’ menu is getting cheaper?

Loss aversion, a key concept in behavioral economics, provides a simple explanation. Loss aversion means people perceive something they lose as a bigger deal than something equivalent they gain. People who need to spend 50 more stars from now on to get a hot coffee feel more pain than customers who will spend 50 fewer stars to earn a free iced coffee. This extra pain leads to more complaints from those hurt and little praise from those benefiting.

Starbucks, for its part, explained the new rewards system this way:

“This change allows us to improve the health of our program while making member favorites like iced coffee easier to earn.”

While its critics may disagree about the reason for the decision, ongoing research by one of us conducted into a tea chain suggests retailers have a profit incentive to make their rewards programs more generous. The reason is simple: When rewards are easier to earn, customers become more motivated to collect points, especially as they approach a reward they can redeem. This is why airlines see some customers doing mileage runs at the end of the year, just to earn better status.

From the company’s perspective, the benefits from customers shopping more frequently can surpass the costs incurred by providing more rewards. And so for companies and consumers, rewards programs can benefit everyone.

This article is republished from The Conversation, an independent nonprofit news site dedicated to sharing ideas from academic experts. If you found it interesting, you could subscribe to our weekly newsletter.

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The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.