Low self-esteem? Avoid credit cards
Luxury items are especially effective at reassuring us of our value, researchers say.
This post comes from Mark Huffman at partner site ConsumerAffairs.com.
When you suffer a hit to your ego, it might be a good idea to postpone any shopping trips. A new psychology study suggests people are more likely to use their credit cards when their self-esteem is low.
Why credit cards and not cash? Researchers Niro Sivanathan of the London Business School and Nathan Pettit of Cornell University say actually parting with cash can be psychologically painful.
The researchers had people work on an ambiguous computer test, and then told half of them that their "spatial reasoning and logic ability was in the 12th percentile," which is a scientific-sounding way of telling them they're not very smart.
They told the other half that they were in the 88th percentile, a perfectly fine performance.
When asked how they might pay for "a consumer product that you have been considering purchasing," people who'd had their ego threatened were substantially more likely to say they were planning to pay on credit. Post continues after video.
In a follow-up study, Sivanathan and Pettit asked 150 college students to think about buying a pair of jeans. Half were told to consider a pair of exclusive, high-status designer jeans, while the rest were told to think about normal, everyday jeans. The students then went through the same computer test, and were told they had done poorly or well.
The self-esteem threat made people willing to pay almost 30% more for the luxury jeans, and they were more than 60% more likely to intend to purchase the jeans with a credit card.
Does a threat to the ego make any purchase look good, or are luxury items particularly good at repairing self-esteem? The students who thought about everyday jeans did not increase how much they would pay for regular jeans when threatened, and the threat did not change their willingness to use credit over cash.
Luxury items are especially effective at reassuring us of our value, the researchers say.
The lesson for consumers is, when you're feeling blue, stay away from the mall.
More on ConsumerAffairs.com and MSN Money:
Copyright © 2014 Microsoft. All rights reserved.
ABOUT SMART SPENDING
LATEST BLOG POSTS
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'