Had a bad day? Life got you down? Retail therapy to the rescue!
If you’ve never staggered out of the mall with a full bag, an empty wallet and mumbling to no one in particular “Can you believe the day I had? Well of course I deserve to buy this after what I went through today!” then you probably know someone who has.
Like me.
When I’ve been in retail therapy (and I’ve been in it many times) sometimes I’ve bought treats, sometimes I’ve bought that outfit or gadget I’ve been eying but had previously never found the excess money to buy it and sometimes I’ve woken up the next day saying “What was I thinking?” as I scramble to find the receipt and cross my fingers the store has a full refund policy.
The Financial Cost of Sadness.
Leave it to three behavioral science professors to not only uncover why retail therapy is so common but also attempt to quantify the additional cost we face by receiving our treatment from the doctors at Mall, Visa and MasterCard.
Jennifer Lerner, Ye Li and Elke Weber recently released study “The Financial Cost of Sadness” deals with how our financial decision making ability changes when we are sad.
Here are the highlights I found to be the most interesting:
- On average, someone who was sad would accept 13-34% less money today than three months from now as compared to someone who was not sad.
- In the battle between current self (I want it now) and the future self (I will benefit from waiting and getting more later) sadness may decrease the perceived value of the future reward thus intensifying the current self.
- Buying something today provides an immediate feeling of “reward” which people use to help them offset the “loss” they experienced that made them sad in the first place. Until this “reward” is received, the “sad” feeling may create a sense of urgency and people are likely to pay more for something they feel they must urgently have.
- When attempting why you should purchase something today rather than saving the money or waiting for it to go on sale in the future, people who are sad provide more reasons why they should buy it today than those who are not sad.
The report concluded with a suggestion that financial decisions should not be made when we are experiencing very strong emotions such as anger or sadness.
What about you?
What has been your experience with retail therapy?
note: This article was originally written as a guest post at www.budgetandthebeach.com
