Tax and product demand

Loss Aversion and Financial Products
Intervention Charitable Giving

How tax in price tag affect purchase

Intervention Description

Researchers observed consumer behavior in California stores under two conditions. In one condition, tax was included in the price tag on the product, whereas in the second condition, tax was added on only at checkout. When the price was included in the price tag, consumer demand decreased by 8%, while there was no significant change on consumer behavior when the tax was added at checkout.