Home > Behavioural Economics > Free Parking = Greater Consumption

Free Parking = Greater Consumption

Parking MeterAn interesting article from the Daily Telegraph in the UK where the pay-and-display machines were vandalised in Cardigan’s (West Wales) main car parks. The cost to repair them is £22,500 but the council are finding it hard to find the finances required.

In the meantime parking in Cardigan is free and this is having a very positive effect on businesses in the town as trade has gone up between 20% and 50%. People like the idea of not having to worry about how long they have left at the parking meter and can spend more leisure time in the shops and cafés.

This shows the effect of the word FREE as we seem to lose all sense when told that something or other is free. Furthermore, our ability to make intelligent trade-offs deteriorates when the price drops to zero. We may go into Cardigan town centre on a day when parking is free even though we’d be much happier going on another day when parking might be £5. Therefore do we go into Cardigan just because it’s FREE?

HT David Parr

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Categories: Behavioural Economics
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