Special Report: What The Government Can Learn About Stimulus From Your Local Supermarket

(WHNT) – The federal government spends billions trying to get people to do what they’re already doing at Star Market in Five Points – go out to a local business and do some shopping.

Up on “The Hill” – it’s all tax cuts and spending hikes, designed to get the money flowing.

But huge goals might obscure the small truths of the free market.

There are ways to get people to spend money, if you know how to influence them.

Dr. Bill Wilkes studied at the Chicago School of Economics, and he says there are certain kinds of money people are more willing to shell out, “Currency that is soiled or laundered or run through washing machines, people would be inclined to spend that more readily than they would a brand new dollar bill.”

So if the government printed fewer crisp new bills and left the crumpled old ones in circulation longer, it could get people spending more money.

Dr. Wilkes adds the size of your bills matters too, “In terms of spending a twenty-dollar versus a one-dollar bill, yeah, most of us I think we would rather spend the smaller currency.”

So when markets head for recession, the government could drop fifties and hundreds from circulation.  People are just more likely to spend the smaller bills that are left over.

Back in the supermarket, ideas like these are common place.

Here you can buy your meat for dinner, turn around and pick up some seasoning, then reach for the barbecue sauce with a single pivot.  Your natural inclination to buy everything you need at once, turns into a much larger purchase when complements like peanut butter and jelly sit next to each other.

Star Market Store Director Doug Owens engineers this temple of consumption, choreographing your visit from beginning to end, “I think when the customer approaches the register then they have a likelihood of picking something up at the last-minute that they might not throw in their basket if they’re down looking at the meat.  You see the championship containers and the Red Diamond Coffee for Alabama’s win.  We put it at the register, because it’s an impulse item.”

So if a supermarket can master behavioral economics, why is the government so far behind?

Dr. Wilkes posits, “When you look at fiscal policy, either altering taxes or altering government spending, the government likes to spend money.  They have a natural propensity to want to spend money.”

But actually the attitude of the government might not be the one that has to evolve.

Dr. Wilkes says, “You have to change people’s attitudes, because you say, yeah, people are more willing to spend the bad money, but are people willing to accept bad money from people that supply the money?”

In the supermarket, Doug Owens knows it’s not easy to overhaul things on a whim.  He says if he did, “I would be run ragged by my customers going, ‘Why in the world are you doing it this way?’”

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