Spending Credit Like a Windfall Gain

We hypothesize that the term "credit" changes psychophysical representations of spending. In a series of experiments, we find that the term credit encourages people to mentally represent spending as a reduction of a gain rather than as a more subjectively painful loss

The Role of Choice Architecture in Promoting Saving at Tax Time: Evidence From a Large-Scale Field Experiment

This paper presents the findings of a large-scale field experiment (N = 646,16) from the Refund to Savings Initiative. The experiment tested a choice architecture and persuasive messaging intervention that increased saving among low-moderate income (LMI) consumers by approximately 50% during tax refund time. Two follow-up experiments parsed components of the intervention. The first follow-up experiment (N = 569) tested the messaging and choice architecture interventions separately, finding that each can increase savings. a final follow-up experiment (N = 554) tested individual elements of the choice architecture intervention, demonstrating that mere mention of savings within choice options was not sufficient to increase saving, however, heavy emphasis of savings and making saving “frictionless” within choice options both effectively increased saving intentions. The final experiment also demonstrated that the choice architecture effect operates similarly for both LMI and non-LMI consumers

Tightwads and spendthrifts.

Consumers often behave differently than they would ideally like to behave. We propose that an anticipatory pain of paying drives "tightwads" to spend less than they would ideally like to spend. "Spendthrifts," by contrast, experience too little pain of paying and typically spend more than they would ideally like to spend. This article introduces and validates the "spendthrift-tightwad" scale, a measure of individual differences in the pain of paying. Spending differences between tightwads and spendthrifts are greatest in situations that amplify the pain of paying and smallest in situations that diminish the pain of paying. They were so skewed and squint-eyed in their minds, their misering or extravagance mocked all reason. (Dante's Inferno, "Canto VII: The Hoarders and the Wasters") E conomic models of decision making are consequentialist in nature. They assume that decision makers choose between alternative courses of action based on a cognitive evaluation of the desirability (i.e., "utility") and likelihood of their consequences. This does not, however, imply that consequentialist decision makers are devoid of *Scott I. Rick ([email protected]) is a visiting professor of operations and information management at the Wharton School, University of Pennsylvania

Tightwads and spendthrifts.

Consumers often behave differently than they would ideally like to behave. We propose that an anticipatory pain of paying drives "tightwads" to spend less than they would ideally like to spend. "Spendthrifts," by contrast, experience too little pain of paying and typically spend more than they would ideally like to spend. This article introduces and validates the "spendthrift-tightwad" scale, a measure of individual differences in the pain of paying. Spending differences between tightwads and spendthrifts are greatest in situations that amplify the pain of paying and smallest in situations that diminish the pain of paying. They were so skewed and squint-eyed in their minds, their misering or extravagance mocked all reason. (Dante's Inferno, "Canto VII: The Hoarders and the Wasters") E conomic models of decision making are consequentialist in nature. They assume that decision makers choose between alternative courses of action based on a cognitive evaluation of the desirability (i.e., "utility") and likelihood of their consequences. This does not, however, imply that consequentialist decision makers are devoid of *Scott I. Rick ([email protected]) is a visiting professor of operations and information management at the Wharton School, University of Pennsylvania

The donor is in the details

<p>Recent research finds that people respond more generously to individual victims described in detail than to equivalent statistical victims described in general terms. We propose that this “identified victim effect” is one manifestation of a more general phenomenon: a positive influence of tangible information on generosity. In three experiments, we find evidence for an “identified intervention effect”; providing tangible details about a charity’s interventions significantly increases donations to that charity. Although previous work described sympathy as the primary mediator between tangible information and giving, current mediational analyses show that the influence of tangible details can operate through donors’ perception that their contribution will have impact. Taken together with past work, the results suggest that tangible information of many types promotes generosity and can do so either via sympathy or via perceived impact. The ability of tangible information to increase impact points to new ways for charities to encourage generosity.</p

Misery Is Not Miserly

Misery is not miserly: sadness increases the amount of money decision makers give up to acquire a commodity (Lerner, Small, & Loewenstein, 2004). The present research investigated when and why the “misery-is-not-miserly” effect occurs. Drawing on William James’s (1890) concept of the material self, we tested a model specifying relationships among sadness, self-focus, and the amount of money decision makers spend. Consistent with our Jamesian hypothesis, results revealed that self-focus both moderates and mediates the effect of sadness on spending. Results were consistent across males and females. Because the study used real commodities and real money, results hold implications for everyday decisions. They also hold implications for theoretical development. Economic theories of spending may benefit from incorporating psychological theories – specifically theories of emotion and the self