A credit card, as a growing number of Americans know, is an easy way to spend. Just flash your plastic now and pay later.
That’s why Dina Megretskaia (BS ‘11), an undergraduate economics and mathematical sciences major at the Tepper School of Business, headed to the Oakland yogurt shop Razzy Fresh to conduct field research on how payment methods affect spending.
Megretskaia hypothesized that young people would splurge more on self-serve yogurt and toppings if they paid with plastic. “Intuitively it makes sense,” she said. “You are not forking over the money.”
Megretskaia won first place in the Undergraduate Economics Program Competition at Carnegie Mellon University’s 16th annual Meeting of the Minds, an undergraduate research symposium held May 4.
In her oral presentation, Megretskaia explained how she sought customer volunteers carrying at least $10 cash and a credit card. She approached them as they entered the store, offering a $5 gift card as an inducement for participation.
She found that people who paid with a credit card spent about 20 percent more than those who paid with cash. Cash carriers spent an average of $4.16 while cardholders splashed out an additional 84 cents, bringing their average spending to an even $5.
Elif Incekara Hafalir, adjunct assistant professor of economics, was the advisor for Megretskaia’s senior project.
Megretskaia said her small-scale experiment points to a larger societal issue that has become increasingly relevant in a country that depends on credit cards. The United States had 181 million credit card holders in 2010, up from 159 million in 2000, she said.
“I am not saying you should throw out your credit cards,” she said. “We can use those results as consumers to be aware of our natural tendency to spend more with credit cards and think a little more about our purchase decisions.”
Her project was part of the rich tapestry of research presented by more than 400 students who showcased their findings in posters, oral presentations and live performances in the University Center.
Many Tepper students delved into real-life campus issues ranging from student consumption of caffeine to faculty attitudes toward plus-minus grading to undergraduate prospects after graduation.
One group -- Tian Wu (BS ‘12), Matthew Belenky (BS ‘11), Timothy Higgins (BS ‘11), John Sperger (HSS ‘12) and Chao Wang (ECE ‘12) -- investigated a common student complaint: late PAT buses.
Over several weeks, the students spent 26 hours at the corner of Forbes and Morewood avenues tracking the arrival times of 480 bus runs.
Their poster project showed that about 50 percent of buses arrived within five minutes of their schedule time -- and the other half were late.
Of the many factors they examined, only road conditions correlated strongly with bus timeliness. “If it was raining, the buses came earlier,” Wu said. “That’s counterintuitive. A possible reason is that the bus comes later, and maybe it is the next bus.”
The students worked under the guidance of Brian Junker, professor of statistics.
Other students delved into research topics far removed from modern campus life.
Sebastian Wai (BS ‘11) tracked the origins of inventors in the semiconductor industry. He searched patent records from the late ‘40s through the ‘70s to pinpoint key inventors. From reams of biographical sources, he culled data on hiring patterns and examined the interplay between parent and spin-off companies.
Wai worked under Steven Klepper, the Arthur Arton Hamerschlag professor of economics and social sciences.
Shweta Suresh (BS ‘11) delved into behavioral research examining generosity to the poor under various conditions.
During her study, one group of potential donors was given the option to pay $1 in exchange for background information on the charity’s recipients.
Suresh found that donors who refused to buy information about the poor initially gave less than people who had no information at all. She also found that donors gave more to the disabled than to drug and alcohol addicts.
Suresh’s study, which was conducted under the guidance of Christina Fong, senior research scientist in the Department of Social and Decision Sciences, may have implications on how much information nonprofits divulge about the people they serve.
“People use this information to punish recipients they don’t think are worthy," Suresh said.
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