Taking the thrill out of spending

Spendthrifts habitually buy more than others, but “taking the thrill out of spending” can change their behavior, new marketing research shows. Extravagant, irresponsible spending has been tied to personality differences, notes Mario Pandelaere, associate professor of marketing in the Pamplin College of Business at Virginia Tech.

Spendthrifts tend to buy impulsively, save less, and run up a substantial amount of credit card debt, Pandelaere says. Tightwads, in contrast, tend to mull over purchasing decisions and typically spend less. Though personality traits can drive individual spending behavior, research has shown that their impact can be curbed and even overridden by situational factors, he says.

“Ironically, despite the rampant problem of overspending,” Pandelaere says, studies on spending behavior have mostly focused on how tightwads can be tempted to spend more — not how spendthrifts can be encouraged to spend less.

Investigating spendthrift psychology

In a recent study, Pandelaere and two fellow researchers investigated spendthrift psychology and ways to alter spending behavior. They tested their theory that spendthrifts are characterized by a need to spend freely, and that this “spending autonomy” gives them a sense of energy and vitality that fuels their tendency to spend.

Elaborating on the notion of autonomy, Pandelaere says that when people can independently regulate or control their own behavior, they experience psychological benefits, such as feeling energized or alive. Researchers call such emotions “subjective vitality,” he says, and have documented its link with behavioral independence in both lab and real-world settings. This sense of vitality can make people feel excited and act more spontaneously, he adds.

“Our central assumption is that spendthrifts enjoy spending without restraint. Consequently, restrictions on this spending autonomy would take the joy out of the experience and diminish their propensity to spend.”

The researchers devised four experiments to examine the effects of reduced freedom of choice through restricting product selection or making clear to participants the opportunity costs of a selection.

Decreasing the willingness to spend

Their results demonstrated that willingness to spend diminishes when choice is restricted — for both self-indulgent purchases as well as charitable donations. The latter finding “underscores the notion that spendthrifts’ motivation to spend is driven not by indulgence but by the sense of vitality they get when they are able to spend freely.”

Willingness to spend also decreased in situations when participants could choose freely within a given assortment but were told that a specific selection was better than the others — thus making clear the opportunity cost to participants whose preferred choice was not the superior one.

Pandelaere says their research shows that spendthrifts begin to behave like tightwads when their purchasing choices are limited. “When spendthrifts are not able to spend freely and autonomously, they experience a dampening of the particular energy and vitality associated with spending and become less willing to spend.”

In daily life, common situations that reduce the freedom in how money might be spent include items being out of stock or fewer color or style choices. What steps might spendthrifts seeking to spend less take? Pandelaere says his findings suggest that they should shop at stores with a smaller assortment of products or consider alternative uses of their money before making a large purchase.

If spendthrifts could think about the opportunity costs of spending, they might see that “their spending is not 100 percent autonomous,” he says. A constraint is always present — one choice eliminates another choice. At the very least, “our research may get spendthrifts to better understand the motivations of their actions.”

Spending to feel energized

Though spending could be curbed by taking the thrill out of it, why spendthrifts need to spend to feel energized is an issue he is exploring in follow-up research.

“Are they confronted with aspects of their lives that drain their energy that leads them to search for vitality through spending?”

Many activities that make people feel animated and energetic don’t involve spending money. For spendthrifts, what might be the obstacles to such activities? Identifying such constraints, Pandelaere says, “could help spendthrifts restructure their environments such that they no longer need spending to feel vital and alive.”

Pandelaere co-authored the paper, “Taking the thrill out of spending: How autonomy restrictions make spendthrifts act like tightwads,” with Christophe Labyt, of Ghent University, and Vanessa Patrick of the University of Houston.

—Sookhan Ho