Why We Drive Across Town to Save a Little
The calculator and jacket problem, three ways of keeping mental accounts, and what later studies say about judging a saving by its share of the price.
Answer to the question
Why do we travel further to save money on cheap items?
Because we judge a saving against the price of the item. In the classic problem, 68 per cent said they would make a 20 minute trip to save five dollars on a 15 dollar item, and 29 per cent would for the same saving on a 125 dollar item. Later studies find the habit, called relative thinking, in other choices too.
Key takeaways
- Amos Tversky and Daniel Kahneman reported in 1981 that 68 per cent of 88 respondents would make a 20 minute trip to save five dollars on a 15 dollar item, against 29 per cent of 93 for the same saving on a 125 dollar item.
- Five dollars off 15 is a third of the price and five dollars off 125 is four per cent, so the same saving looks larger on the cheap item.
- Peter Darke and Jonathan Freedman found in two experiments that both the dollar amount saved and the percentage off affected whether people would put effort into saving.
- Ritesh Saini and Sweta Thota found relative thinking stronger under high cognitive load, with products rich in feeling and among people who prefer intuitive decisions.
- In Ofer Azar's four scenarios with 415 university students, participants valued a quality difference more when the good cost more; the flight showed both relative and absolute effects.
In the classic calculator and jacket problem, 68 per cent of 88 respondents said they would make a 20 minute trip to save five dollars on a 15 dollar item. When the same five dollars came off a 125 dollar item, 29 per cent of 93 respondents said they would.
The shopper is buying both a jacket and a calculator, one at 125 dollars and one at 15, and a store 20 minutes away sells the 15 dollar item for 10. Swap the prices and the saving falls on the other item. Amos Tversky and Daniel Kahneman reported the contrast in 1981, and it is the classic answer to why people travel further to save money on cheap items: the same five dollars looks large beside a small price and slight beside a big one.
The drive costs the same 20 minutes in both versions, and so does the saving. Only the price it is measured against differs. Tversky and Kahneman's paper in Science describes predictable shifts in preference when one problem is framed in two ways, and compares the effect to the way a change of viewpoint alters how an object appears. The calculator problem is a small, everyday case of that larger claim.
Why does the same five dollars change size?
Five dollars off 15 is a third of the price. Five dollars off 125 is four per cent. A shopper who reads the saving as a share of the price will find the first worth a drive and the second hardly worth a detour, even though the time spent and the money kept are identical. The shopper has not made an arithmetic slip. The sum is simply never set against the thing that matters for the trip, which is what 20 minutes is worth.
Peter Darke and Jonathan Freedman tested what people respond to when deciding whether to seek a bargain, and their two experiments point to more than a share of the price. Both the dollar amount saved and the percentage off affected whether people would put effort into saving, with the amount counting alongside the percentage. A bigger saving pulls harder at any price, and a bigger share pulls harder at any saving. The calculator result is what you get when the dollars are held fixed and only the share moves.
The same reasoning runs in reverse in The £3.95 You Spent to Save £3.95, where shoppers add items to a basket to avoid a delivery fee smaller than the extra they spend. In both cases a small sum looms large because of the frame around it.
What do the three mental accounts predict?
Daniel Kahneman's Thinking, Fast and Slow reprints the analysis behind the calculator problem and names three ways a shopper can set up the books for a purchase. The choice of account decides how the five dollars is read, and so which shoppers should have said yes.
| Account | What the saving is set against | What it predicts for the trip |
|---|---|---|
| Minimal | Only the difference between the options: five dollars gained for 20 minutes | The same answer in both versions |
| Topical | The price of the item being bought, 15 dollars down to 10 or 125 down to 120 | A yes for the cheap item, far fewer for the dear one |
| Comprehensive | All the shopper's spending, such as a month of expenses | The same answer in both versions, with the saving small |
The data sit with the topical account. People tie the saving to the item it comes with and leave the other purchase out, which is why the 125 dollar jacket in the basket does nothing to make the five dollars feel small on the calculator. Kahneman's book also says that broader frames and more inclusive accounts tend to produce more reasoned decisions, which is the case for the comprehensive column. We side with the minimal account as the sensible comparison, five dollars against 20 minutes, with people differing in what they would take for the time.
The wider idea of mental accounting, defined in What is mental accounting, has been put to a recent test. A 2025 registered replication by Mengfei Li and Gilad Feldman re-ran seventeen problems from Richard Thaler's review of the idea and found most supported, some mixed and a few not, a record that suits an account best held as a useful frame and not a fixed law, as Mental Accounting and the Easy Money argues from the wider evidence.
Does relative thinking depend on how we decide?
Ritesh Saini and Sweta Thota asked what strengthens the habit of weighing savings in relative terms. High cognitive load, products rich in feeling and a preference for intuitive decisions all made relative thinking stronger. A shopper who is busy, who is buying something that stirs emotion or who goes with instinct is more likely to judge a saving by its share of the price.
The habit also reaches beyond saving trips. Ofer Azar gave 415 university students four scenarios, a laptop, a grocery shop, a bicycle and a flight, each with a low-price and a high-price version in which the high price was three times the low. Participants stated the highest price at which they would still choose the lower-quality option. In all four scenarios they valued the quality difference more when the good cost more. The ratio of the mean valuations was 3.25 for the laptop, 2.67 for groceries, 3.26 for the bicycle and 2.19 for the flight.
For the laptop, the groceries and the bicycle, the results fit full relative thinking, in which only the proportional gap counts. The flight differed. There both the relative and the absolute price difference mattered, which is the pattern Darke and Freedman found for savings. The ratio there, 2.19, was the lowest of the four.
Common questions
Why do we travel further to save money on cheap items?
Because the saving is judged against the price of the item. In the classic problem, 68 per cent would make a 20 minute trip to save five dollars on a 15 dollar item, and 29 per cent would make it for the same saving on a 125 dollar item.
What is relative thinking?
Relative thinking is judging a saving or a price difference as a share of the price, not as a sum of money. Saini and Thota found it stronger under high cognitive load, with products rich in feeling and among people who prefer intuitive decisions.
Does the amount saved matter as well as the percentage?
Yes. Darke and Freedman found in two experiments that both the dollar amount saved and the percentage off affected whether people would put effort into saving.
Does relative thinking appear outside saving trips?
Yes. In Ofer Azar's four scenarios, a laptop, groceries, a bicycle and a flight, participants valued a quality difference more when the good cost more, and the flight showed both relative and absolute effects.
Sources
Kahneman, D. Thinking, Fast and Slow. Seed book; vault hub Books/Thinking Fast and Slow.
Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211(4481), 453-458. doi:10.1126/science.7455683 https://doi.org/10.1126/science.7455683
Darke, P. R., & Freedman, J. L. (1993). Deciding whether to seek a bargain: Effects of both amount and percentage off. Journal of Applied Psychology, 78(6), 960-965. doi:10.1037/0021-9010.78.6.960 https://doi.org/10.1037/0021-9010.78.6.960
Saini, R., & Thota, S. C. (2010). The psychological underpinnings of relative thinking in price comparisons. Journal of Consumer Psychology, 20(2), 185-192. doi:10.1016/j.jcps.2010.02.003 https://doi.org/10.1016/j.jcps.2010.02.003
Azar, O. H. (2011). Relative thinking in consumer choice between differentiated goods and services and its implications for business strategy. Judgment and Decision Making, 6(2), 176-185. doi:10.1017/s1930297500004125 https://doi.org/10.1017/s1930297500004125
Li, M., & Feldman, G. (2025). Revisiting mental accounting classic paradigms: Replication of the problems reviewed in Thaler (1999). Peer Community in Registered Reports. doi:10.24072/pci.rr.100375 https://doi.org/10.24072/pci.rr.100375