Salience and taxation: Salience effect versus information effect

Yuqing Zheng, Edward W. McLaughlin, Harry M. Kaiser

Research output: Contribution to journalArticlepeer-review

8 Scopus citations


Posting tax-inclusive price tags on grocery products can reduce demand through an information effect that corrects consumers who misperceive the actual tax status. We disentangle the information effect from the salience effect developed by Chetty, Looney and Kroft (2009, CLK for short). By utilizing CLK's survey finding that 20% of shoppers mistakenly think there is no sales tax on toothpaste, we show that the information effect actually explains 31% of the sales drop in CLK's field study. Therefore, ignoring the information effect may overestimate the salience effect by a large degree.

Original languageEnglish
Pages (from-to)508-510
Number of pages3
JournalApplied Economics Letters
Issue number5
StatePublished - Mar 2013


  • demand
  • information effect
  • sales tax
  • salience effect
  • taxation

ASJC Scopus subject areas

  • Economics and Econometrics


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