Behavioral Economics / Unbundling

Unbundling At Checkout Counters – Paper Or Plastic?

Almost all supermarkets checkout clerks ask you this question, “paper or plastic?”. You are not charged extra for the bags but it does not mean it is free. The cost is covered by the margins earned on the goods sold. Most stores give you a bag credit of 5 cents for every bag you bring in. Is that the right approach? People respond to incentives but they respond more to disincentives (Loss Aversion).  It is not obvious to the customer at the checkout counter that they are forgoing savings. Even if it is , according  Kahneman and Tversky, the intensity of positive feeling from gain of five cents per bag is not as high as that of the negative feeling if they were to be charged 5 cents per bag.

When people see a 5 cent charge per bag they are more than likely to bring their own bags than if there were given a credit for each bag. Charging for bags is unbundling. It fits the pre-condition I set for true unbundling, the service is truly optional. Unlike other unbundling scenarios there is no need to train customers or improve their reference price. A reference price is already set through the per bag credit practice.

At least one retailer, IKEA, figured this out and charges you for every bag used for packing your stuff.

I propose businesses unbundle the price of shopping bags, for the sake of environment and for profitability?

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2 thoughts on “Unbundling At Checkout Counters – Paper Or Plastic?

  1. Pingback: Unbundling and Behavioral Economics « fatuous diatribes

  2. Pingback: Stick or Carrot – Traffic Tickets or Gas Vouchers? | Iterative Path

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