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What's driving the denomination effect? First off, some consumers see large bills as more sacrosanct than a bunch of chump change. "People tend to overvalue bigger bills," says Joydeep Srivastava, a marketing professor at the University of Maryland's Robert H. Smith School of Business and a co-author of the study. "There's a psychological cost associated with spending a $100 bill that's not there with spending smaller bills." We tend to isolate the cash in our minds. Each $20 is a separate, less valuable entity than that single $100 bill. So it's easier to part...
Further, consumers fear that once they break that large bill, they won't be able to stop spending the rest. "Once that barrier is passed, it's like a dam gets broken," says Srivastava. "And we've found that when people decide to spend, they'll spend more with the bigger bill than with the smaller bill." Researchers have labeled this phenomenon the "what the hell" effect: "I've broken the hundred; it's gone from my wallet. What the hell, I may as well blow off the rest." So consumers, afraid that the "what the hell" effect will drain...
...example, in one experiment, the researchers gave 89 undergraduate business-school students from the University of California, Berkeley, and the University of Maryland a dollar. They told the students they could keep the money or use it to buy candy. About half the students were given a dollar bill, while the other half were given four quarters. Only 26% of the students who got the bill spent the money, while 63% of the students given quarters bought some candy. However, once they decided to spend, the students with the paper made bigger purchases. (See Real Simple's saving and budgeting...
...House bill includes a controversial provision for so-called reconciliation - which would leave the door open to piggyback massive programs on the budget like universal health care in case they fail to make it through the regular legislative process. House Democrats and the Administration support such a move specifically for health care - though, theoretically, the provision would allow for anything, including energy, to be pushed through the Senate with just a simple majority rather than a filibuster-proof 60 votes. Several moderate Democratic Senators, including Ben Nelson of Nebraska, have said that inclusion of reconciliation instructions in the final bill...
...Both chambers are expected to pass their respective versions by the end of next week, and then the real fun begins, as members work to hammer out the differences into a final bill. During this process, everyone, Obama noted at the Senate lunch, will have to give a little...