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Plastic or cash?
From an interesting article on spending came this "what the what?" moment:
"Duncan Simester, a professor of marketing at M.I.T.’s Sloan School of Management, conducted experiments asking people to bid on certain items. Those in one group were told they could use only cash as payment — with access to an A.T.M. — while a second group could use their credit cards to pay. It turns out that the participants in the latter group bid significantly higher than those limited to cash."
The implication in the article is that plastic didn't seem real and cash does. Um, how about the fact that ATMs limit how much you can withdraw in a day to much less than my credit card limit? Or that if you've already withdrawn the limit you're stuck with what's in your pocket?
It could also be that cash (in the form of ATM limit+what's in the wallet) forms a practical spending limit, not just a budget one's decided on but could reconsider. "Not having any more money to spend" is a harder thing to argue with than "I don't want to spend that much."
Maybe they started bidding at a dollar, maybe they were bidding at low amounts, and so on. Maybe withdrawal limits weren't a factor. But it seemed weird to me.
(I do agree with the cautions on debit cards, and that thinking in terms of "I would have to work X hours to buy this shiny" can be useful....)
"Duncan Simester, a professor of marketing at M.I.T.’s Sloan School of Management, conducted experiments asking people to bid on certain items. Those in one group were told they could use only cash as payment — with access to an A.T.M. — while a second group could use their credit cards to pay. It turns out that the participants in the latter group bid significantly higher than those limited to cash."
The implication in the article is that plastic didn't seem real and cash does. Um, how about the fact that ATMs limit how much you can withdraw in a day to much less than my credit card limit? Or that if you've already withdrawn the limit you're stuck with what's in your pocket?
It could also be that cash (in the form of ATM limit+what's in the wallet) forms a practical spending limit, not just a budget one's decided on but could reconsider. "Not having any more money to spend" is a harder thing to argue with than "I don't want to spend that much."
Maybe they started bidding at a dollar, maybe they were bidding at low amounts, and so on. Maybe withdrawal limits weren't a factor. But it seemed weird to me.
(I do agree with the cautions on debit cards, and that thinking in terms of "I would have to work X hours to buy this shiny" can be useful....)