It’s True: We Shop Till it Hurts

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Christmas Shoppers, New York

Feel like going out to dinner at that trendy new spot but can’t justify paying $120 for the tasting menu everyone’s talking about? Then take a date, spend twice as much and call it an investment in the relationship. There, that didn’t hurt a bit, did it? That, whether you realize it or not, is just some of the perfectly nonsensical thinking you use to make purchasing decisions every day — and that thinking will go a long way toward determining whether you overspend or underspend this holiday season. (More on Why We Strive for Money Over Time — and Why It’s a Mistake)

Everybody loves to spend money at least some of the time — because everybody loves the stuff you can buy with it. The key to the pleasure level of any transaction is the balance between the pain of the payment and the reward of the purchased object. Spending $1 for a brand new house would feel very, very good. Spending $1,000 for a ham sandwich would feel very, very bad. Spending $19,000 for a small family car would feel, well, more or less right. But as with physical pain, fiscal pain can depend on the individual, and everyone has a different threshold.

Scott Rick, a professor of marketing at the University of Michigan, has been studying this phenomenon since he was a graduate student at Carnegie Mellon University. Running volunteers through spending exercises, asking them about their subjective levels of pain and pleasure as they made purchases and even conducting fMRIs of their brains, he’s come up with some simple things that separate what he straightforwardly calls spendthrifts from tightwads. (More on Don’t Choke: 5 Tips for Performing Under Pressure).

Unsurprisingly, Rick finds that tightwads experience more emotional pain when making a purchase than spendthrifts do, which discourages them from spending more — or sometimes even making the purchase at all. They also may experience more anticipatory pain — an awareness that they won’t regret the purchase just today, but when they wake up tomorrow too. A healthy frugality can come from such an awareness, but there’s danger in taking it too far; that way lies true Scrooge-hood. Of course, there are countervailing dangers in going too far in the opposite direction — in being insufficiently sensitive to the pain of a purchase; that way lies the poorhouse. (More on Why Spamming Your Friends With Cute Kitties Is Good Karma)

Numerous things can ratchet our pain level up or down. Credit or debit cards, for starters, are nothing short of shoppers’ novocaine. Even in the age of digital purchases and virtual money, we still attach a special value to dirty paper with pictures of presidents on it. Handing some of that to a cashier simply hurts more than handing over a little sliver of plastic.

Buying things for someone else, Rick says — which is at the heart of holiday shopping — can also be easier than buying things for ourselves. It’s not just unselfish to shop for others, after all; it’s downright virtuous. “Tightwads and spendthrifts spend about the same amount of money on gifts,” Rick said. “Spending on gifts may be just as painful as usual for tightwads, but the necessity of buying gifts overwhelms the influence of that pain.” (More on Photos: Those Things Money Can Buy)

The identity of the recipient makes a difference too, Rick says. It hurts more to buy an optional gift — for a coworker or a cousin, for example — than for grandma or your kids, and so tightwads may be less likely to do it. But here, as with dates, the idea that you’re making an investment can ease the pain. If that coworker also happens to be your immediate superior or that cousin just may lend you the family beach house this summer, it’s easier  to bite the bullet and buy the gift.

All of this awareness takes you only so far — especially at this time of year. Overspending is as certain a part of the holiday season as overeating. But pushing away from both the table and the cash register at least a little bit sooner can make the post-holiday hangover hurt a little bit less.

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