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Research offers new insight into why we do what we do

2013-06-30T00:00:00Z Research offers new insight into why we do what we doGregory Karp Chicago Tribune Arizona Daily Star
June 30, 2013 12:00 am  • 

Would you pay 50 percent more for "organic" firewood? Would you be more willing to buy a used refrigerator if it had an "attractive enamel-coated ferromagnetic exterior?" Would you be more likely to buy juice from a server with a British accent?

There's a whole area of academic study about consumer behavior that examines not what we buy, but why. Some findings lend insights to our own buying habits. Recognizing them in ourselves just might help us become better consumers.

Here are some recent findings from the halls of academia.

FACEBOOK CAN MAKE YOU FAT AND POOR: It's preferable to think we all make calculated, rational decisions based on empirical analysis. But the truth is, many purchases are influenced heavily by emotion.

One recent study concludes that participating in online social networks can raise self-esteem. For example, you post a positive message or photo about yourself on Facebook, and you're likely to receive positive comments and thumbs-up "likes" from friends.

That sounds like a good thing.

But for people with strong ties to their social network, that boost in self-esteem can lead to lowered self-control, according to Keith Wilcox of Columbia University and Andrew Stephen of the University of Pittsburgh, who published a study in the June issue of the Journal of Consumer Research.

Elevated feelings of self-worth can lead to impulsive and indulgent behavior, poor traits when it comes to diet and money decisions.

Researchers concluded that greater social-network use was associated with a higher body-mass index, increased binge eating, lower credit scores and higher levels of credit-card debt for those with strong ties to their online network.

"Even a small 5-minute 'dose' of social-network use in our studies was enough to significantly lower self-control in subsequent choices and tasks," researchers wrote. "Heavy users likely expose themselves to multiple doses of this effect a day."

LUMP YOUR SAVINGS: Common personal-finance advice is to maintain several different accounts, a vacation account, a new car fund or Christmas club, to help save more money.

But one group of researchers has a suggestion for people trying to spend less and save more: Consolidate multiple bank accounts into one.

Individuals will save more and spend less when they have a single account, according to research by Promothesh Chatterjee at the University of Kansas School of Business and fellow researchers at the University of Utah. Their findings appeared in a recent edition of the journal Organizational Behavior and Human Decision Processes.

Multiple accounts create a "vagueness" about how much money you really have, making it easier to justify expenditures you shouldn't make, researchers found.

A single account makes it clear how much money you have in total and what you'll have left if you spend some of it.

CLOSE YOUR MENU AND ENJOY: Physical acts of completion can provide consumers with a sense of closure that makes them happier with their purchases, Yangjie Gu, Simona Botti and David Faro, all of the London Business School, reported in a study to be published in the Journal of Consumer Research.

That's as opposed to revisiting the decision and continually reassessing the options.

Examples? In a restaurant, decide what you want to order and then close the menu. Or, when selecting from a chocolate box, choose a candy and replace the lid. In both cases, you're likely to be more satisfied with your choice because you physically closed something, indicating an end to the decision process.

"Consumers are less likely to be satisfied with a purchase when they compare it to other options," the authors wrote.

WHEN WANTING IS BETTER THAN OWNING: Some consumers might get more pleasure from desiring products than actually owning them. Yet they are willing to overspend and go into debt because they think future purchases will transform their lives.

They tend to believe an acquisition will improve their relationships with other people, enhance the way they feel about themselves, enable them to have more pleasure in life, and allow them to carry out life tasks more effectively.

They're often wrong. The high is usually short-lived. That's the upshot of research by Marsha L. Richins of the University of Missouri.

FLUSH UPBRINGING AND LATER MONEY CHOICES: How wealthy your family was as a child shapes how you respond to economic stress later in life, a team of researchers contends in a study published by the Association of Psychological Science, "When the Economy Falters, Do People Spend or Save?"

Faced with economic crises as adults, those who grew up with plentiful resources tend to become more risk-averse and slow down spending.

But people who grow up in poorer environments tend to spend money faster during those times, acting impulsively, taking risks and succumbing to temptations. The reason probably traces to our ancestors, who would try to attract reproductive mates before they died from the hardship, researchers say.

"If you are from a poorer environment and hit with a recession, you might think your chances of weathering the storm aren't great, so you put your resources into other outcomes that are more tied to reproductive pursuits and interpersonal displays intended to show off, with things like jewelry and cars," said one of the researchers, Joshua Ackerman of MIT's Sloan School of Management."

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