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Why We Pay Special Attention to Gas Prices

Think about it. The price of everything is going up (with the exception of electronics) – bread, milk, eggs, clothing, cars. Why should gas prices be special?

Here’s Dan Ariely’s take from the Predictably Irrational Blog:

So why does the amount we spend on gasoline feel so enormous? I think it is because of the way we buy gas.For the several minutes that I stand at the pump, all I do is stare at the growing total on the meter – there is nothing else to do. And I have time to remember how much it cost a year ago, two years ago and even six years ago.Yet I have no such memory about the prices of items in any other category. I have no idea how much milk was six years ago, how much bread was three years ago or how much yogurt was a week ago. But I suspect that if I stood next to the yogurt case in the supermarket for five minutes every week with nothing to do but stare at the price, I would also know how much it has gone up – and I might become outraged when yogurt passed the $2 mark.Another odd thing about the way we buy gasoline is that we usually buy multiple units. I just bought 13 gallons for a little more than $55. The sticker shock isn’t as intense when I see the price per gallon as it is when I’m faced with the total cost. Fifty-five dollars! I remember when I filled my tank for $20 and $25 and $30! Maybe if we bought 13 loaves of bread at a time or 15 gallons of milk we might become just as sensitive to how much we spend on those items.While we concentrate our anger on gas prices, we are ignoring increases in electricity, food and health insurance – expenses that might actually have a greater effect on our budgets.

Cha-ching! cha-ching! You know, I think he’s right about this!

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