Which is to say if you're paying a developer $70K+/year (+taxes/benefits), and you're skimping on a $2K one time cost cubicle, even if that loss results in increased turnover ($$$), reduced morale ($$$), or reduced productively ($$$) then that's an irrational decision.
Employers should consider a "1-2%" per-employee per year "morale fund." If you're paying someone $70K/year the least you could manage is $700-1400 to keep them sweet, it is just good business. Better equipment, software to make them more productive, a nicer chair, whatever.
But I've come to realize that managers rarely make decisions for purely rational reasons. The prestige and internal politics often play a larger role than pure costing.