This Week in Personal Finance Blogging: Keep a Calculator Handy When You Shop
| January 20, 2012 |
It happens every time. I live a few blocks down from a high-end grocer and every once in a while, I’ll spend a lazy weekend afternoon wandering the aisles ogling “deals” for swanky items like “single source organic cacao chocolate bars,” “olive oil tortas” and “black cherry all natural soda.”
Usually, I can stop myself from splurging. At this point in my life, it’s hard to justify paying $13.99 for a jar of pasta sauce. However, this particular grocer is also notorious for weekly specials – and I always fall for them.
The deals usually go something like this: Buy four Greek yogurts for $5. Or buy seven gourmet frozen dinners for $3.99 each. Often, the deals will also be paired with a sampler, making it even harder to pass up once you’ve tasted how delicious something like locally produced hatch chile jam really is (I once bought three jars of the stuff on special, then had to give two of the jars away).
At the time, I’ll convince myself that I’m getting a deal, especially since I’m only buying luxury goods that are “on sale.” But when I look at my receipt later on, it’s always clear I overspent – by a lot.
Apparently, this happens to a lot of shoppers. According to a new study due to be published in the Journal of Consumer Research this summer, shoppers are more likely to jump on a deal if the number of items is presented before the price. This is especially true, say researchers, if a large number of items are presented in a package, making it difficult to mentally calculate how much you’re actually going to have to pay.
Study authors Rajesh Bagchi and Derick F. Davis of Virginia Tech say that we fall for these deals, in part, because of a psychological phenomenon called “anchoring.” When we’re presented with two values for a deal (such as 20 boxes for $12), we tend to focus more heavily on the first value and think less about the price. If grocers presented the price first, in contrast, we’d be more likely to focus on how much we’d have to pay for the items rather than how much we’d like to take those items home.
“Consumers may encounter a large package where item quantity is presented first and believe they are receiving a great deal,” say the authors in a press release. “However, our research suggests that they should take a step back and make the relevant unit price comparisons to properly assess the package.”
With cautious spending in mind, here are some of the best personal finance posts from the last week:
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