TY - JOUR
T1 - Salience and taxation
T2 - Salience effect versus information effect
AU - Zheng, Yuqing
AU - McLaughlin, Edward W.
AU - Kaiser, Harry M.
PY - 2013/3
Y1 - 2013/3
N2 - 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.
AB - 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.
KW - demand
KW - information effect
KW - sales tax
KW - salience effect
KW - taxation
UR - http://www.scopus.com/inward/record.url?scp=84866437226&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84866437226&partnerID=8YFLogxK
U2 - 10.1080/13504851.2012.718050
DO - 10.1080/13504851.2012.718050
M3 - Article
AN - SCOPUS:84866437226
SN - 1350-4851
VL - 20
SP - 508
EP - 510
JO - Applied Economics Letters
JF - Applied Economics Letters
IS - 5
ER -