Chapter 11: Q11-2-9BSC (page 533)
In a study of the 鈥渄enomination effect,鈥 43 college students
were each given one dollar in the form of four quarters, while 46 other college students were each given one dollar in the form of a dollar bill. All of the students were then given two choices: (1) keep the money; (2) spend the money on gum. The results are given in the accompanying table (based on 鈥淭he Denomination Effect,鈥 by PriyaRaghubir and Joydeep Srivastava, Journal of Consumer Research,Vol. 36.) Use a 0.05 significance level to test the claim that whether students purchased gum or kept the money is independent of whether they were given four quarters or a \(1 bill. Is there a 鈥渄enomination effect鈥?
Purchased Gum | Kept the Money | |
Students Given Four Quarters | 27 | 16 |
Students Given a \)1 Bill | 12 | 34 |
Short Answer
At 0.05 level of significance, it can be concluded that students purchased gum or kept the money is dependent on whether they were given four quarters or a $1 bill.
Thus, there is a denomination effect.