It’s tax time, and that can only mean one thing:…
Photo courtesy of Images of Money via Flickr
Earlier in the week, the Journal of Consumer Research released a study that showed consumers tend to spend more when buying with credit cards than they do when using cash. The authors of the study believe the reason goes beyond simple convenience, and hinges on psychology: apparently, we’re more likely to focus on the benefits of the purchase, and not the cost, if we don’t actually have to count out the money ourselves. If the authors are correct, this means we ought to be able to trick ourselves into spending less by paying with cash when we’re afraid we’ll go over budget.
In the interest of saving money, and in the interest of science, here are some other studies that can have a positive impact on the way we shop.
Don’t Shop on the iPad
This tip comes from a survey conducted by IBM, meant to study how our spending habits correlate with the devices we use for our online shopping. The results are dramatic: iPad users make online purchases about twice as often as iPhone users, Android users, or people shopping on PCs. Not only that, iPad users are likely to spend more with each purchase.
Of course, we can’t really find cause and effect here. It’s likely that people with iPads have more disposable income, and it’s possible that they just like spending more. All the same, it’s also possible that the more relaxed, no-business-allowed user experience makes people more comfortable shopping on impulse. If you think this might describe you, try doing your shopping on a PC, and preferably an ugly one.
Don’t Fall for the Left-Digit Effect
It might seem obvious, but retailers have a sneaky reason for pricing everything with 9s on the end. Researchers call it the left-digit effect, or our tendency to pay too much attention to the left-most digits on a price tag. For example, if we see something priced $2.99, we’re more likely to think of it as being in the neighborhood of two dollars, instead of the more accurate three dollars.
We can get around this by rounding everything in our heads before we compare prices or make a purchase. The trick is staying vigilant enough that you won’t let your unconscious tendencies get the better of you.
The Dangers of Decision Fatigue
Decision fatigue a term experimental psychologists have coined in order to describe what happens when we exhaust ourselves with too many decisions. It works just like physical fatigue: if you run a marathon, you will not run as well as when you started. Research in decision fatigue, or “ego depletion,” as it’s also known, has far reaching consequences. For our purposes, we’ll stick to shopping.
When we go shopping, we have to make countless little decisions about what product is the better deal, whether or not we prefer a particular color or style, or whether we need to buy the thing in the first place. Each of these little judgement calls is taxing, if only slightly. By the end of the day, however, we will not have the energy to make intelligent choices. We might cope with this fatigue by not trying as hard, or letting the dealer/salesman/whoever decide for us. People with decision fatigue are an easy target for ripoffs.
A way around this is to not make any major purchases on days when we have to make a lot of other decisions. Instead of shopping for a new computer after work, it’s a better idea to do it on the weekend. Or, if you’re running errands, you might want to hit up the Apple Store before you do your grocery shopping.
Have your own tips for saving money with the power of pop psychology? Please share in the comments.