Herd Mentality Moves Many to Needless Penny-Pinching

Amid the economic distress, many people who can spend as freely as they could before aren’t, the Washington Post reports. Such consumers, economists say, take psychological cues from friends and the media and pinching pennies needlessly—which only helps deepen the downturn. Upper-income consumers cut spending from $185 in May to $101 last month, tracking increased media emphasis on economic news.

Since September, per-day spending by those making $90,000 or more has plunged 40%. “We have a lack of spending right now in the economy, but it's the pronounced lack of spending by upper-income consumers that has had a major overall impact on what’s taken place,” one economist said. But, psychologists note, when one group sees another taking cover, they feel compelled to do the same. (More consumer spending stories.)