The Bottom Dollar Effect: The Influence of Spending to Zero on Pain of Payment and Satisfaction

Spending that exhausts a budget is shown to decrease satisfaction with purchased products relative to spending when resources remain in the budget. Six studies, including those in which participants earn and spend real resources and evaluate real products, explore this bottom dollar effect. This research contributes to prior mental accounting research regarding how costs influence decision making (e.g., bundling, coupling, sunk costs) and to the satisfaction literature. Supporting the role of pain of payment in this process, we show that the bottom dollar effect increases as effort required to earn budgetary resources increases, decreases in the presence of windfall gains, and decreases when there is less time between budget exhaustion and replenishment. Mediation analyses further demonstrate the role of payment pain in the bottom dollar effect. Implications are discussed in the context of behavioral research, marketing promotions management, and public policy.