Retail Therapy Makes the Sad Spender a Happy Shopper?

Category: Financial News

retail_therapy_1After advocating for sobriety in spending and the delay of instant gratification for decades, many financial advisers are aghast at a recent spate of reports extolling the virtues of retail therapy. After all, conspicuous consumptions was singled out as one major cause of the Great Recession.

Much as we would all like common sense to prevail and however much we’re told that saving versus nonsense spending is always the right thing to do, the work done by social scientists to explain the motivations behind shopping always helps place things in perspective. Let’s look at some of the more recent studies.

Feel-Good Retail Therapy (1)

The British Psychological Society

Apparently, shopping does make one happy. This was the conclusion of Selin Atalay and Margaret Meloy, faculty of HEC Paris and Penn State, respectively. In three separate studies on retail therapy they found out that subjects used indulgent purchases to elevate their mood, and that participants with a low mood at the outset tend to consume more.

When they asked a group of 69 students to complete a retrospective record of consumption over a two-week period to document purchasing behavior, mood and regrets, the researchers found out that the items bought to repair mood were around half the value of those bought to celebrate. This led them to conclude that retail therapy might not be an out-of-control activity, after all. Most importantly, the subjects felt that their retail therapy purchases were generally beneficial and that they felt no regret.

Feel-Good Retail Therapy (2)

Business Wire

In a study commissioned by online retailer in March 2013, TNS Global found that roughly half of Americans surveyed shopped to improve their mood – more women (63.9%) said so than men (39.8%).

What do people spend on? The top three for women are clothes, food, and shoes. For men food tops the list followed by electronics, and music/movies. Why do they shop? Top reasons cited for engaging in retail therapy are to improve their mood after a bad day at work (18.9%), after hearing bad news (14.6%), and after a fight with their significant other (12.2%). This led CEO Kevin H. Johnson to conclude that “shopping truly is ‘therapy’ for many people, and can help raise one’s spirits after a bad day.”

Shopping and Self Esteem

Social Psychological and Personality Science

It is no surprise then that when self-esteem is threatened, people reach for their credit card to buy and boost the ego. This is the contention of a study by Pettit and Sivanathan, academics at Cornell University and the London Business School, respectively. Using students as subjects, the researchers subjected them to an exercise and then provided feedback that they were either (1) not so smart, or (2) did perfectly fine. The group whose self-esteem was threatened generally chose to buy with credit when confronted with a purchase decision after the exercise. Further, when asked to choose between luxury or ordinary items the “threatened” group preferred to buy high-status items.

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Petit and Sivanathan conclude that the desire to combat threats to self-esteem by compensating with consumption plus the pain-free experience of consuming on credit contribute to a vicious cycle of consumption and debt.

Sad Spenders Spend More

Psychological Science

Is mood really such an important component in shopping decisions? Perhaps this study will confirm the role emotions play in retail therapy. In the paper Misery is not Miserly, researchers from the Carnegie Mellon, Harvard, Stanford and Pittsburgh universities found that “people feeling sad and self-focused spend more money to acquire the same commodities than those in a neutral emotional state.” They contend that whether you’re aware of it or not, how you’re feeling has an impact on even routine economic decisions.

Their experiment involved priming subjects to be in a sad state, after which they were asked to purchase a sporty water bottle and they had to choose the actual price from a range choices. Sad participants actually offered to buy the bottle at prices 300% of the actual price. Let’s skip the math and go straight to the model offered by the researchers as an explanation for this behavior. They concluded that sadness and the resulting lack of focus leads people to devalue their self-worth. The consequent desire to enhance the self leads them to increase the valuation of a potential acquisition.

Mind your Moods

Here’s the plain truth. No matter how much we listen to self-help gurus who preach transcendental evaluation of self-worth around strength of character and spirituality, the relationship between the self and one’s possessions has been strongly established. In the aftermath of personal finance disasters that highlighted the Great Recession, there’s a virtual cottage industry of academics trying to understand how consumption can be used by people to compensate for undesirable emotional states.

It’s the classic struggle of man versus self here. And many times we end up losing to our wicked selves. Perhaps, instead of just minding our budgets we should be mindful of our moods as well. A hard thing to do, for sure, considering how sacred the pursuit of happiness has become. But really, is shopping the only solution?

Do you shop when you’re sad? Does shopping make you happy?

What’s your retail therapy story?

By Nestor Gilbert

Senior writer for FinancesOnline. If he is not writing about the booming SaaS and B2B industry, with special focus on developments in CRM and business intelligence software spaces, he is editing manuscripts for aspiring and veteran authors. He has compiled years of experience editing book titles and writing for popular marketing and technical publications.

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