I’m standing in a long line in a crowded bookstore, carrying a pile of books. Out of the corner of my eye I spy, in a bin of small items, a pair of rubber duck headphones.
Now, I happen to be the type of person who enjoys a good pair of rubber duck headphones. But I don’t actually need them. They’re $14.99. What will I do?!
Apparently this depends on what’s bubbling through my psyche at any given moment. “Among the emotions that control money behaviour are fear and anxiety,” says Kathleen Gurney, founder of the Florida-based Financial Psychology Corporation. “We’re on a scale between anxious and confident.”
Gurney’s point, I think, is that the edgier we are, the more likely we are to buy stuff, as if the exchange of cash for product had Valium-like properties. It doesn’t, of course, and the angst seeps back in. When we shop, she suggests, we act out our anxiety but don’t process it, sort of like when laid-off workers go on spending sprees.
But what else affects cash register reckonings? Peter McGraw, prof of psychology and marketing at the U of Colorado, points out that under normal conditions, people can control their emotional impulses when shopping. But when subjects in one study are given a mental task – holding a string of numbers in their memory – as they are making a decision between a virtuous option (a fruit cup) and a less virtuous one (chocolate cake), things change.
“People’s preferences shift when you put them under cognitive load,” he says, explaining that those subjects not distracted by a cerebral chore, make the healthy choice.
When in retail land, it appears, distraction is the enemy of rational decision-making. Here I am thinking about the books in my hands, which are essentially also impulse buys, so I buy the headphones, right?
Maybe. But there’s something else: how you spend also depends on where you got the cash. “We treat our income differently from our bonuses,” says the Columbia Business School’s Jonathan Levav. “People will blow a bonus on a flat-screen TV they’d never do that with income.”
His study, Emotional Accounting, co-authored by McGraw, explains that consumers tend to spend cash they feel good about in hedonistic ways, while “laundering money they feel bad about by doing virtuous things.”
The two had students fill out a questionnaire and then gave them $2, telling them the money came from either a computer firm or a cigarette company. “We then gave them a choice between spending the $2 on books or ice cream. In the computer company position, 22 per cent chose the book coupons, whereas in the cigarette condition 44 per cent did.”
So people who work in the non-profit sector should be living la vida loca while coke dealers should be running orphanages?
Back to my rubber duckies. The money in my hand is from my earnings, not a bonus. Do I buy the adorable little things? Of course I do. But then I give them away as a gift, which I’m pretty sure makes it all totally justifiable.
A few weeks later, I’m in a vintage store when I see 7-foot-long mounted sailfish. I am the type of person who enjoys a nice taxidermy fish. It’s $650….
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