What a difference a penny makes.
In a recent study by researchers at Washington State University, shoppers made different choices based on whether a price was rounded to the nearest dollar or priced just below that point – the difference between $3 and $2.99, for example.
The study found that consumers pay a lot of attention to the left digit in a price when choosing between items.
For example, when presented with two pens priced at $1.99 and $4, people were more likely to choose the cheaper pen.
When the prices were $2 and $3.99, however, people are more likely to buy the more expensive pen.
WSU professor David Sprott collaborated with a researcher at Colorado State University on the study, which is set to be published this fall in the Journal of Consumer Research.
The research also found that shoppers tend to see the gap between prices much differently, based only on whether prices are rounded up or not. People perceive a smaller difference between $30 and $40, for example, than between $29.99 and $39.99, WSU said in a news release.
Study participants were asked to choose between two gifts. A quarter of them picked the higher-priced gift when choosing between gifts priced at $29.99 and $39.99. About half of them picked the higher-priced gift when choosing between $30 and $40 options.
Just something to think about when you’re comparison shopping.
Debt takes a drop
Americans seem to be making a dent in their debt. But appearances may be deceiving.
The country’s personal-savings rate rose slightly to 3.6 percent in December, according to the Federal Reserve. And consumer debt fell for the first time in the 52 years of record-keeping.
But experts say that the drop in debt is probably driven more by tightfisted lenders than it is by consumers suddenly paying off debt.
For people who lose their jobs, keeping up with the payments on their health plan extensions is virtually impossible – something that the laid-off have long known, but which is confirmed in a new study.
Families USA, a national group representing health care consumers, said the average monthly payment for family coverage under COBRA – the federal law allowing laid-off workers to remain on their former employer’s health plans for 18 months – eats up 84 percent of unemployment benefits.
“If you’re subsisting on an unemployment insurance check and 84 percent of that check is what’s needed to continue family coverage, clearly it’s unrealistic to expect you can afford to do that and still have money left for food and rent and utilities and other necessities,” Ron Pollack, executive director of Families USA, told the McClatchy-Tribune News Service.