Taking the thrill out of spending
March 6, 2017
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.
Consumer behavior and persuasive communication
Being a scholar of consumer behavior has allowed Mario Pandelaere to understand his own actions as a consumer better and to make better decisions … sometimes.
Having expertise in consumer psychology and knowing how businesses can and do use it to their advantage haven’t always prevented him from falling prey to such manipulations — although, Pandelaere says, “it has led me to more readily realize that I have been duped.”He recalls, for instance, explaining in class a particular persuasion tactic used by marketers, only to be swayed by it days later, when he unwittingly complied with an actual merchant’s request.
EDUCATION AND RESEARCH
Pandelaere, who earned all four of his graduate degrees at KU Leuven, Belgium’s largest and highest-ranked university, has master’s degrees in business engineering, statistics, and psychology, and a Ph.D. in psychology. He cites his main research interests as: causes and consequences of materialism, luxury and conspicuous consumption, numerosity (the presentation and processing of quantitative information), well-being, and social influence.
“I have always liked statistics and the more quantitative courses during my studies,” Pandelaere says. “They have naturally led to me to think about how the representation of quantitative information may change people’s perceptions of the information and their decisions based on it.”
After receiving his doctorate, Pandelaere spent two years as an academic researcher in marketing at Leuven. He enjoyed doing consumer behavior research as a post-doc, he says. Investigating materialism, in particular, “seemed like a bridge” between marketing and communication sciences, which he subsequently taught at Leuven.
He moved to Ghent University for a research professorship in marketing, a post he held for seven years before joining Virginia Tech in 2015. Pandelaere’s favorite topic to teach remains “persuasive communication.” Persuasion, “the effect of framing information one way or another on decisions,” and social influence have also been subjects of some of his research.
INTEREST IN WELL-BEING
As for his interest in well-being, Pandelaere says it resulted directly from his study of materialism. “A good deal of research shows that materialistic people are not as happy or satisfied with their lives as less materialistic people. I found that research fascinating, leading me to consider well-being more in depth.”
One result is a paper he wrote expounding materialism’s “silver lining.” “I wondered why people would continue to be materialistic when it makes them unhappy. What do they get out of their lifestyle?”
His research suggested that materialistic people were “more likely to engage in luxury consumption, and luxury consumption makes people, at least in the short run, happy. “It is great to indulge,” he says. “In addition, the effect of luxury consumption on momentary happiness is stronger for materialistic than less materialistic consumption.”
That materialism causes lower levels of happiness, however, is a conclusion Pandelaere is not prepared to accept: “the jury is still out on that question.”
He says some research shows that “low self-esteem, conducive to lower happiness, may spur materialistic interests” — thus, lower levels of happiness may actually cause materialism. The relationship between happiness and materialism, Pandelaere says, may well be two-way.