Want to spend less? Ditch
the credit card and don’t
shop when you are sad
Chris Barnes and Adam Kidson
Cryder, C.E., Lerner, J.S., Gross, J.J., & Dahl, R.E. (2008).
Prelec, D., & Simester, D. (2001).
Contents
 Introduction
 Research paper 1 - Misery is not Miserly…
 Research paper 2 - Always Leave Home Without It…
 Linking the research papers to the Begley article
 Conclusion
Introduction – Inside the shopping brain
 2008 recession – Begley article looking at
psychology behind consumer spending.
 Referenced 2 articles
―Cryder et al. (2008)
―Prelec & Simester (2000)
Misery is not Miserly - Rational
 This article looks for empirical connections between
the self and emotion in context of the misery is not
miserly effect.
 Effects of sadness on buying run counter to
predictions
 Sadness  Increase in valuation of commodities.
Model of how sadness and self-focus
influence valuation of material possession
Misery is not Miserly – Hypothesis,
Prediction and Goals
 Hypothesis
―That the experience of feeling sad and self focused
leads individuals to pay more for commodities than
the other wise would.
 Prediction
―When self-focus is high, sad individuals experience an
implicit devaluation of the self, which in turn triggers
increased valuation of new commodities.
 Primary Goal – Test two implications of model.
― Whether misery is not miserly effect depends on one’s level
of self focus.
― Whether self-focus explains the misery is not miserly
effect.
Misery is not Miserly - Methods
 3 Tasks
―Emotion induction
 Sad – video on death of boys mentor (from the Champ)
 Neutral – video on Great Barrier Reef
―Self focused essay
 Sad – how situation like one in video would affect them
 Neutral – Daily activities
―Buying task
 Buy water bottle
 Manipulation check and Debriefing
Misery is not Miserly - Results
 Does self-focus moderate the misery not
miserly effect ?
 Does self focus mediate the misery not miserly
effect?
Misery is not Miserly – Results Summary
 Misery is not miserly effect occurs only
when self-focus is high.
 Self focus moderates effect of sadness on
spending.
 High levels of self-focus mediate
relationship between sadness and
spending.
 Sadness and self focus influence buying
prices.
Misery is not Miserly - Alternative
Explanations and Implications
 Mood Repair theories although appearing to work
don’t mention self focus.
 Could be - sad and self-focused individuals 
reduced self value, therefore value other things
more.
 Valence based models of affect and decision making
need updating.
 Depression  Increased self-focus and diminished
sense of worth.
Credit Card effect - Rational
 Evidence supporting conjecture that credit cards
increase spending
 Several previous tests in this area
 Credit card premium
 The effect can be large – up to 200%
 Mainly indirect testing
Credit Card effect – Hypothesis and Prediction
 People are willing to spend more when using a
credit card over cash
 Two separate studies using real money
transactions
 Use payment type and credit card logo exposure to
see what affects the most
 Knowledge of the market price tested also
Credit Card effect – Methods – Study 1
 Prizes – Willingness to pay for tickets to sporting
events
 Three prizes up for second-price sealed-bid auction
for MBA students
 Student randomly allocated payment condition
sheets.
 Payments to be made by the next day
Credit Card effect – Results – Study 1
Credit Card effect – Methods – Study 2
 Testing where market value is known – Gift
certificates for a local restaurant
 Used Becker-DeGroot procedure to gain reservation
values
 Students split into four groups
Credit Card effect – Results – Study 2
 Credit card premiums
of -13% and 36%
 Students providing
card details show
similar figures to
study 1
 Students not providing
details show little
differentiation of
payment method vs
price
Credit Card effect - Conclusions
 Study 1 shows the presence of the credit card
effect
 Credit card effect greater when market value
unknown
 No evidence that exposure to logos increased
willingness to pay
 Willingness-to-pay varies depending on payment
method
Begley article – How they link
 Sadness and Spending + Cash vs Credit
 Begley – spending cash activates insular giving
you negative feelings
 Study 1 – people spend more when sad
 Study 2 – people spend more on credit cards
 Spending cash can give negative emotions
 Spending on credit cards numbs consumers from
the pain of parting with money
Begley article – How they link
 Therefore sad people with credit cards may be a
poor combination
 The pain of spending on cards hits home when
numbness wears off
 Much worse than the initial hit if spending cash –
with interest
 Insular prevents people from getting into trouble
 Credit card = Anti-insular device?
Relevance – Further Research
 Quite a high level of relevance to each other and
seems to fit with the real world and our own
experiences
 Further research:
―Give sad people a credit card and vice versa
―Observational study on the spending habits of
people with Bipolar disorder
―Does experience matter?
―Does Sex matter?
Take home message
 Avoid shopping when sad
 If you have to shop when sad, leave the credit
card at home
 If possible, don’t use credit cards at all
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Questions?