“...in contemporary America, people use consumer purchases to compensate for psychological states of insecurity,” -- Derek Rucker and Adam Galinsky, Journal of Consumer Research.



According to a recent study published in the Journal of Consumer Research, feeling powerless can trigger a strong desire to purchase products that convey high status.

The authors of the study, Derek Rucker and Adam Galinsky both of the Kellogg School of Management at Northwestern University have discovered through their work that many consumers are willing to pay higher prices in order to feel better about themselves and their present situation. These feelings can be more amplified, when you have low self-esteem or you have poor feelings about your current status.

The authors report that consumers have, “...increased willingness to pay for status-related objects stems from the belief that obtaining such objects will indeed restore a lost sense of power.”

The authors go on to compare two individuals who might desire a Rolex watch. One of them is very wealthy, and the other person has been demoted. While wearing the watch, the wealthy person might not feel better, but the person who has been demoted can feel significantly more powerful.

Although there is nothing necessarily wrong with spending money, the trouble for many of us comes up when in order to feel better about ourselves many of us are willing to make large purchases, and perhaps place those expensive purchase on our credit cards. However, another study published in the Harvard Business Review, by Anat Keinan and Ran Kivetz says that splurging now makes you happier later. And, not splurging now leads to pangs of regret later.

They said, “Thinking about short-term regret drives consumers to be virtuous, while thinking about long-term regret leads them to be extravagant,” and “Over time, those who had indulged felt less and less guilty about their choices, whereas those who had been dutiful experienced a growing sense of having missed out on the pleasures of life.”

The choice to save, spend or splurge is up to you. However, real problems arise when people enter into a cycle of placing expensive items on their credit cards, paying down their credit card debt, and then splurging again to feel better about themselves.

If you find yourself trapped in a similar "spend, pay down and splurge" cycle then you may want find some way to successfully navigate your spending triggers. Perhaps, you can begin to benefit by not being overly critical of past financial decisions. Developing compassion for yourself, might help you to distance yourself from the emotionally painful connection to the cycle.

For some people, the next step might be to allow yourself the time and space to contemplate the reason behind your desires. Knowing why you made certain purchases may help you to be more capable of making conscious choices around your true needs and desires in the future. You’ll then be able to develop more responsible financial coping strategies.

Here are some questions for consideration:
* Do you allow your spouse, or significant other, to view your credit statements?
* Do you feel you have to “justify” your purchases?
* Do you have a budget (and stick with it)?
* Do you push off the “debt worry” until it’s time to pay the bill?
* Do you pay off your credit card balance each month?

Article:
Derek D. Rucker and Adam D. Galinsky. “Desire to Acquire: Powerlessness and Compensatory Consumption” Journal of Consumer Research: August 2008.

Tags: Desire Passion Yearning Spending Budgeting Balance

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