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How Credit Card Payments Increase Unhealthy Food Purchases

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A new study reports that:

"Some food items that are commonly considered unhealthy also tend to elicit impulsive responses. The pain of paying in cash can curb impulsive urges to purchase such unhealthy food products.

"Credit card payments, in contrast, are relatively painless and weaken impulse control.

"Consequently, consumers are more likely to buy unhealthy food products when they pay by credit card than when they pay in cash."

I can get behind this--it actually makes perfect sense. I'll sooner buy a bottle of Maker's Mark if I'm "not really paying for it" (read: using a debit/credit card) than I would using cash.

If I'm "actually paying" (read: handing over actual US dollars), I'm quicker to reach for the $11 Evan Williams than the $30 Maker's.

Drazen Prelec, associate professor of marketing at MIT's Sloan School of Management, proved this some years ago.

“We organized a silent auction for tickets to sold-out Celtics basketball games,” he said. “We told half the bidders they could only pay with cash and we told the other half they could only pay with a credit card.”

The result?

“On average, we found that the credit card buyers bid more than twice as much as the cash buyers bid. That’s got to be crazy, right? It suggests that the psychological cost of spending a dollar on a credit card is only fifty cents.”

Prelec maintains that credit cards disconnect the consumption transaction, which is pleasant, from the payment transaction, which is painful. “The moral tax gets blurred with credit cards,” he said. “When you’re consuming, you’re not thinking about the payments, and when you’re paying, you don’t know what you’re paying for."

There's something else that works for those trying to spend more wisely. It's not popular, it's not easy, and it is probably considered wholly anti-American in many circles:

A little something called...self-control.
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