Thought Leadership

Government sponsored charity

By Colin Walls

A while ago, I wrote about the “.99 Phenomenon” – the technique whereby consumers are fooled into spending more money than they think. I started wondering what happened to all the $0.01 [and €0.01 and £0.01] coins. In some places – like a well known fast food outlet with a Scottish sounding name – there is always a collection box by the cash register. That makes a lot of sense and I started wondering how common this was elsewhere.

I then realized a very subtle, underhand, but benign plan instigated by the US government …

I have observed that in US supermarkets, there is almost always one or more charity collection boxes by the register. The .99 phenomenon cannot really explain this, as few people go into a supermarket to by a single item. So what is the plan? I have two theories about how these boxes get filled up:

Firstly, people seem to have trouble making change. There are [essentially] only four coins in the US currency system [compared with 8 in most European countries], so it should be quite simple. Actually, I know it is simple because I can do it, so it cannot be hard. I am old enough to have been trained in mental arithmetic as a kid. Maybe people are not taught that any more and do not want to whip out a calculator. Perhaps they regard their time as being worth more than the value of the dimes, nickels and pennies, which is fair. In any case, the charities gain.

The second effect is much more subtle and is where the US government comes in. Outside the US, in most countries, when you see a price on something, that is a clear indication of how much you are going to pay. Seems logical and simple, but life is not like that in most US states [my friends in Oregon are smiling now]. The reason is that Sales Tax is added at the register. That is bad enough, but only some items attract the tax. Just in case you master the rules about tax eligibility, the rates are different from state to state – or even from one county to another. And lastly, the numbers are silly. I seem to recall that, in Santa Clara for example, the rate is 8.25%. No normal human being can work that out in their head.

In both cases, the result is the same: most people just pay using bills, fish out the quarters from their change and drop the rest in the box. Ka-ching!

I commend President Obama and his predecessors for devising such a brilliant way to persuade people to help those who are less fortunate than themselves.

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This article first appeared on the Siemens Digital Industries Software blog at