Latest / Behavioral Economics with Fexingo: Decision Making, Bias, and How People Really Spend
Why Your Brain Treats a 5-Dollar Coffee as a Routine Expense
Episode 52 of Behavioral Economics with Fexingo explores why we routinely spend $5 on coffee without a second thought, yet agonize over a $5 ATM fee. Lucas and Luna dissect the concept of 'pain of paying' and how mental accounting categorizes small indulgences as guilt-free while labeling financial fees as losses. They cite a 2016 study by researchers at Carnegie Mellon and Stanford showing that consumers spend 64% more when paying with a gift card than cash, because the pain of paying is muted. The hosts also discuss how coffee chains like Starbucks exploit this by making payment…
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