You Can Buy Smarter If You Understand Consumer Behavior
Would you pay 50 percent more for "organic" firewood? Would you be more willing to buy a used refrigerator if it had an "attractive enamel-coated ferromagnetic exterior?" Would you be more likely to buy juice from a server with a British accent?
Of course, all firewood is organic, magnets stick to many refrigerators, and the desire for juice should be unrelated to a seller's accent. Still, we consumers are not always rational and can be tricked by sellers. We sometimes open our wallets for marketing gimmicks.
There's a whole area of academic study about consumer behavior that examines not what we buy, but why. Some findings lend insights into our own buying habits. Recognizing them in ourselves just might help us become better consumers.
Here are some recent findings from the halls of academia.
* Facebook can make you fat and poor. It's preferable to think we all make calculated, rational decisions based on empirical analysis. But the truth is, many purchases are influenced heavily by emotion. Consumer behavior studies show us numerous examples.
One recent study concludes that participating in online social networks can raise self-esteem. For example, you post a positive message or photo about yourself on Facebook, and you're likely to receive positive comments and thumbs-up "likes" from friends.
That sounds like a good thing.
But for people with strong ties to their social network that boost in self-esteem can lead to lowered self-control, found Keith Wilcox of Columbia University and Andrew Stephen of the University of Pittsburgh, who published a study in the June issue of the Journal of Consumer Research.
Elevated feelings of self-worth can lead to impulsive and indulgent behavior, poor traits when it comes to diet and money decisions.
Researchers concluded that greater social network use was associated with a higher body mass index, increased binge eating, lower credit scores and higher levels of credit card debt for those with strong ties to their online network.
Authors called the findings "concerning," given increased time that people, especially adolescents, are spending on social networks.
"Even a small 5-minute 'dose' of social network use in our studies was enough to significantly lower self-control in subsequent choices and tasks," researchers wrote. "Heavy users likely expose themselves to multiple doses of this effect a day."
The self-esteem and self-control effects did not seem to affect those with weak ties to their network.
* Lump your savings. Common personal finance advice is to maintain several different accounts, a vacation account, new car fund or Christmas club, to help people save more money.
But one group of researchers has a suggestion for people trying to spend less and save more: Consolidate multiple bank accounts into one.
Individuals will save more and spend less when they have a single account, according to research by Promothesh Chatterjee at the Kansas University School of Business and fellow researchers at the University of Utah. Their findings appeared in a recent edition of the journal, Organizational Behavior and Human Decision Processes.
Multiple accounts create a "vagueness" about how much money you really have, making it easier to justify expenditures you shouldn't make, researchers found.
A single account makes it clear how much money you have in total and what you'll have left if you spend some of it. …