Spending Depends on the Feeling

A new research has focused on the way people spend money, when they buy things for themselves and when they do it for others, and also on the causes of this behavior.

We live in a consumerist society so we all have a tendency of buying more things that we need, but the authors of the study wandered what made people spend, and how much they were willing to give for themselves and for others.

They concluded that the decisive element was power, and more specifically how powerful people felt at the time of choice.

The authors carried out five experiments to see “whether the powerful and powerless differentially value the self versus others, and whether this, in turn, translates into observable differences in their spending behavior.”

For the study, people were given the role of a boss or of an employee in a task, they were exposed to ads that made them feel powerful or powerless and some were asked to remember a passed experience when they had or their lacked power.

Afterward, they all took part in an auction where they had to bid for a t-shirt and a mug, for them, or to give to somebody else.

The authors observed that “when participants were bidding to obtain the product for themselves, those who completed the high-power recall task bid $12.08 on average, whereas those who completed the low-power recall task only bid $6.49, an astonishing difference of more than 46 percent.”

And when they had to bid for someone else, the trend was reversed: powerful-feeling people bid $7.10 while low-power people bid $10.81 on average; and the interesting part is that the same spending pattern was observed for all the five experiments.

“When participants were asked to make a purchase for themselves, the amount of money spent was consistently greater for participants assigned to the high-power condition relative to participants assigned to the low-power condition,” say the authors.

Another interesting observation is that even though powerful people spent more on themselves, they were actually happier when spending for others.

This study was carried out by Derek D. Rucker, David Dubois, and Adam D. Galinsky (Kellogg School at Northwestern University) and was published in the Journal of Consumer Research.