Just Ask Jenna Looks at Overspending

by Jenna C, ’26

Dear Jenna,

Last weekend, I walked into Gap planning to buy one plain t-shirt with no intention of buying anything else. But after seeing the President’s Day sale signs, I walked out with three shirts, two pairs of pants, and a pair of shoes. I spent over $100! I would never have bought all of them at full price, and I definitely did not need them. I always thought sales were meant to help people save money, not spend more. Why does a discount make me buy more, even things I would not normally purchase?

From,
Confused by a “Good Deal”

Dear Confused by a “Good Deal,”

You are not alone. Experienced by many people, when items go on sale, we expect discounts will help us spend less overall. Intuitively, we know that lower prices should mean smarter purchasing. But in reality, sales often lead people to buy more than they planned, sometimes even things they never wanted in the first place. 

In economics, your unplanned purchases can be explained by mental accounting. Mental accounting describes how people categorize and treat money differently depending on the situation. When something is on sale, shoppers often treat the discount as “saved money” rather than money that could have remained unspent. Because the purchase feels justified by the sale, buying additional items feels like less spending and more like taking advantage of an opportunity.

In addition, you are more elastic than you realize. According to price elasticity of demand, when our demand is elastic, a small change in price leads to a large change in how much we buy. At full price, you planned to buy one t-shirt. Once price dropped, displaying elasticity, you bought multiple additional items. The sale did not just lower the cost of each item. It changed the total amount you wanted to buy. 

This does not mean sales are bad or that people are being irrational on purpose. Sales can help people afford items they genuinely need. The problem arises when the mental category of “saved money” makes spending feel painless. One way to avoid this is to treat discounted purchases the same way as full price ones by asking yourself whether you would still buy the item without the sale. 

At the end of the day, people are not trying to make poor financial choices. They are responding to how money is framed in the. moment, which can quietly push them to spend more than they intended.

Best of luck!
Jenna

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