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The Psychological Science of Spending Money

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The Psychological Science of Money

Abstract

This chapter discusses the psychological research related to the act of spending money, with the aim of understanding the underlying psychological processes involved. To that end, the emotions involved in spending money before, during, and after the money changes hands are explored, including the role of anticipated and anticipatory emotions, different orientations to the gains and losses inherent in an act of spending, and the process of hedonic adaptation. Additionally, given how fundamental choice is to the act of spending money, factors that influence the decision-making process are discussed, including the role that comparative processes and expectations play in the process of making decisions and evaluating their outcomes. In each case, particular attention is paid to the psychological forces that influence the ultimate goal underlying any act of spending: happiness. Finally, several concrete strategies for making purchases most likely to lead to success on this goal are identified, including purchasing experiences over possessions, spending pro-socially, and making meaningful purchases.

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Notes

  1. 1.

    It is worth noting, of course, that people accumulate wealth for reasons that have nothing to do with specific planned expenditures, such as to prevent an unexpected and catastrophic life event (like an expensive health care emergency) from destroying one’s ability to meet basic needs. Indeed, the anxiety associated with debt has devastating effects on well-being (Brown, Taylor, & Price, 2005). The status that comes with wealth is also seen by some as an end in and of itself (Kasser & Ryan, 1993). While these factors undoubtedly play a role in the acquisition of wealth, because this chapter is specifically exploring the act of spending money and not its acquisition, they are better suited for discussion elsewhere.

  2. 2.

    At the extreme low end of the income spectrum, spending money might even be better thought of as intended to decrease misery rather than increase happiness (see Martin & Hill, 2012).

  3. 3.

    Those who generally feel that they spend and save appropriately are referred to as unconflicted (Rick et al., 2008).

  4. 4.

    A recent blind taste-test study found that those with some training with wine show a positive (though small) relationship between price and enjoyment, meaning that they enjoyed the more expensive wines more. Novices, however, actually showed a negative correlation; they liked the cheaper wines better (Goldstein et al., 2008).

  5. 5.

    This is in part due to companies attempting to distinguish themselves in a crowded marketplace. For any given brand, adding more options leads consumers to infer that the brand has expertise in the area, and therefore that its offerings are better (Berger, Draganska, & Simonson, 2007). This approach is, of course, less effective when everyone does it, starting the arms race that created ultra-specific options like Diet Caffeine-Free Cherry Vanilla Coke, and resulted in sagging store shelves and bewildered consumers.

  6. 6.

    A recent meta-analysis suggests that the demotivating effect of too-much-choice may be present in only certain circumstances, such as under time constraints or when the need to justify one’s choice is high (see Scheibehenne et al., 2009, 2010). This is described further below.

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  1. Department of Psychology, Colby College, 5550 Mayflower Hill Drive, Waterville, ME, 04901-8855, USA

    Travis J. Carter

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  1. Behavioural Science Institute, Radboud University Nijmegen, Nijmegen , The Netherlands, Department of Psychology, Utrecht University, Utrecht, The Netherlands

    Erik Bijleveld

  2. Department of Psychology, Utrecht University, Utrecht, The Netherlands

    Henk Aarts

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Carter, T.J. (2014). The Psychological Science of Spending Money. In: Bijleveld, E., Aarts, H. (eds) The Psychological Science of Money. Springer, New York, NY. https://doi.org/10.1007/978-1-4939-0959-9_10

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