The Psychology of Money

The science of shopping is a hot topic, with a number of journals helping marketers get inside the minds (and wallets) of their customers. A recent Chicago Tribune article summarized some of the recent research. “Shopping momentum” was the topic of a recent Journal of Marketing Research article. Researchers have found that the first purchase a shopper makes is crucial because it can “open the floodgates of buying.” From the Journal of Consumer Research comes news that shoppers are not typically good at math (shocking, right?). Therefore, marketers are encouraged to use techniques like offering 20 percent off the original price plus an additional 25 percent off the already-reduced sale price. At first glance, it appears to be a 45 percent discount, when in reality it amounts to a 40 percent discount.

The best way to keep those “floodgates of buying” from swinging too far open is to follow that trusty (if somewhat rusty) advice to shop with a list.

One other common shopping mistake is to put too much focus on the percentage of a discount instead of the absolute dollar amount, especially with more expensive purchases. Getting a $40 sweater for $20 seems great (“Wow, 50 percent off!”), whereas a 5 percent discount on something costing $400 doesn’t seem so great (“A lousy 20 bucks – who cares?”).


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