Left-Digit Bias and Inattention in Retail Purchases : Evidence from a Field Experiment

Chetty, Looney and Kroft (2009) find that consumers perceive tax-salience as a price increase, i.e. sales decrease when posting tax-inclusive prices. Using data from their unique experiment, I test whether individuals display inattention to the decimal digits of the price (i.e. left-digit bias). I find a larger decrease in sales of products in which tax salience shifts the left-most digit upwards, even though the tax rate is the same for all products. This study presents new evidence on left-digit bias from a quasi-random experiment, which also suggests that this is the main channel through which tax salience affects consumers' decisions