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Spendthrifts, Tightwads, Equally Unhappy

As the mega-sales ramp up for Black Friday, some shoppers will rush to the malls ready to spend. Others will stay home and pinch their pennies.
/ Source: Discovery Channel

As the mega-sales ramp up for Black Friday, some shoppers will rush to the malls ready to spend. Others will stay home and pinch their pennies.

Both groups, according to a growing body of research, will probably end up unhappy.

"Some people experience this distress a lot, where they typically spend less than they would like to, they pass up on indulgences, they buy cheaper versions when they could have bought higher quality items, and they end up kicking themselves afterwards," said Scott Rick, a marketing professor at the Ross School of Business at the University of Michigan in Ann Arbor.

"On the other end of the spectrum," he said, people "chronically spend more than they should and end up kicking themselves, too."

By studying the relationship between emotions and shopping habits, Rick and colleagues are finding ways to help companies inspire the shopping-averse to loosen their wallets. The work may also help people boost their own happiness and even improve their marriages by adjusting their shopping behaviors.

To understand why we shop and how shopping makes us feel, researchers talk about three categories of people. The first group, called the unconflicted consumer, defines about half of us, said Cynthia Cryder, a consumer behavior researcher at the Olin School of Business at Washington University in St. Louis. Unconflicted consumers feel relatively content with how much they spend and what they buy.

A smaller percentage of people are spendthrifts who thrive on luxury purchases. At the other extreme are tightwads, who avoid spending altogether. When they do buy things, they always pick the cheapest options.

Tightwads seem to outnumber spendthrifts by a ratio of three to two, Cryder's research suggests. And when you ask people, she added, just about everyone can say which group they belong to.

Those differences may be rooted in our brains. In a 2007 study that scanned the brains of people as they made purchases, Rick and colleagues found that the distress that tightwads experienced while spending money was accompanied by extra activity in a brain structure called the insula, which is associated with negative feelings.

That finding, reported in the journal Neuron, suggests that the "pain of paying" is a physical experience, not just a metaphor.

Spendthrifts, on the other hand, are happy to shop. But after the bills are paid, Rick has found, they feel as much distress as tightwads do.

"If you just ask people to report their general life satisfaction, you get an inverted relationship," he added. "Tightwads and spendthrifts are equally unhappy."

Ironically, the two groups also seem to attract each other. Consistently, Rick and colleagues report in a study in press at the Journal of Marketing Research, tightwads end up marrying spendthrifts, even though people tend to seek out romantic partners with similar personalities.

In this case, both tightwads and spendthrifts tend to be unhappy with their own spending habits. As a result, they find love in their shopping opposite. But surveys show that money conflicts up the risk of marriage troubles in these mismatched pairs.

Understanding the intertwined relationships between emotions and shopping habits could help both marketers and consumers.

Studies have shown, for example, that tightwads feel better about a $5 charge if it is described to them as a "small $5 fee," rather than just a "$5 fee." They also feel better when purchases are sold to them as investments rather than just stuff.

To loosen themselves up, Rick added, tightwads can try using credit cards, which seem to make buying easier for people.

Spendthrifts, on the other hand, can dampen their shopping enthusiasm by carrying cash, preferably in large denominations, as studies show that 100 dollar bills are harder to part with than twenties are. Avoiding malls and other settings that prompt you to spend might help, too.

Despite the major differences between tightwads and spendthrifts, we might all be doomed on the day after Thanksgiving. Research shows that people feel far less conflicted about buying stuff for others than they do about buying stuff for themselves.

"When it comes to buying gifts, the two groups look exactly the same," Cryder said. "Maybe Black Friday is the great equalizer."