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Passing the buck to the wealthier: Reference-dependent standards of generosity
... Next, consider the example by Berman, Bhattacharjee [19]; their research indicates that less wealthy individuals see wealthier individuals as having a higher donation obligation because higher incomes are associated with more financial slack (i.e., an abundance of spare money) [29]. These subjective giving standards arise from judgments about higher earners' spare money. ...
... On the other hand, a descriptive model of judgment may include consumers holding higher standards for luxury firms given that they are associated with wealth and excess. Namely, while research has demonstrated that individuals follow a descriptive model of behavior when making judgments about donation standards [19], our research demonstrates that individuals follow a normative model of behavior: Regardless of the type of firm-and even in light of evidence suggesting moral [immoral] impacts-individuals hold steadfast beliefs about equal corporate contributions. ...
... Given these differences, it would be interesting to understand how ethical beliefs may also be included. Furthermore, Berman, Bhattacharjee [19] hypothesize that "[a]lthough our studies focus on individual charitable donations, the effects we uncover likely apply towards resource contributions in social collectives and other organizational units." We take up this call by examining how the same subjective donation standards that occur when individuals make social comparisons do not apply in the organizational context. ...
Consumers actively look to and expect businesses to engage in charitable donation activities. While past research has demonstrated the strategic benefits that corporate social responsibility (CSR) affords to firms, little is known about the way consumers apply subjective (or objective) ethical standards for corporate donations. Our research focuses on the way expectation standards of CSR are applied to luxury (versus non-luxury) companies. Do consumers hold a belief that luxury firms are expected to donate more? Four experimental studies find robust and converging evidence that consumers do not hold luxury firms to a higher standard; instead, they take on the normative belief that companies are obligated to donate equal amounts. This reference-independence holds stable across different product categories (Studies 1a and 1b), perspectives (Study 2), and attempts to alter the belief (Study 3). However, individual differences do exist among consumers regarding the level of donation expected, particularly for materialists and spendthrifts. Specifically, moderation analyses reveal that materialists and spendthrifts (compared to non-materialists and tightwads) expect higher levels of corporate donations regardless of the type of firm (i.e., luxury vs. non-luxury). This research extends the discussion of subjective ethical beliefs in the context of luxury CSR.
... In line with this idea, we hypothesized that participants of high SES would be less likely than participants of low SES to judge targets of higher SES as having a relatively greater responsibility to act sustainably (particularly for High Cost scenarios), given that high SES participants have more at stake in making this sort of evaluation. This hypothesis is supported by findings that people's judgments of others' donations to charity are reference dependent and that people of higher income are expected to give more by people of lower incomes than they themselves believe they should (Berman et al., 2020). ...
... Instead of focusing on evaluations of strangers' obligations to act sustainably, Study 2 explored whether people would judge themselves as having more or less of an obligation to act sustainably if they were of a different social status. This change in framing was inspired by recent research indicating that obligations to donate to charity are reference-dependent on one's own economic position: In hypothetical scenarios, people estimated that they would have more money to spare and therefore would have larger donation standards at higher incomes than actual higher earners themselves believed (Berman et al., 2020). Shifting from judgments of others to judgments of the self (in diverse socioeconomic scenarios) also decreased the extent that participants were required to imagine fictional characters. ...
... Overall, these results align with previous research indicating that perceived SES is positively correlated with environmental concern (Sulemana et al., 2016) and that moral judgments of consumers who make ethically relevant purchases depend on their own economic status and the monetary cost of the behavior (Olson et al., 2016). These results also support the findings of previous research showing that wealthier individuals were considered to be more obligated to make charitable donations than less wealthy individuals (Berman et al., 2020). Our results extend these previous findings by showing that these phenomena apply even to actions that have far-reaching consequences involving the global climate. ...
As climate change increasingly wreaks havoc, sustainability is becoming a moral imperative. Yet, the strength of individuals' moral obligations to engage in sustainable actions may vary in accordance with their societal positions. In three studies (total N = 614), we investigated how moral obligations vary as a function of socioeconomic status (SES). Participants evaluated their own and others' obligations to engage in sustainable behaviors through vignettes that varied the cost of these behaviors and the SES of the characters who were engaged in these behaviors. Results showed that perceived moral responsibility was diminished in cases when sustainability required monetary sacrifice, particularly when the people being evaluated were individuals of low SES. The increase in moral obligation associated with elevated SES of the characters in the vignettes was fully mediated by perceptions of greater affordability and by perceptions of greater culpability for contributing to climate change. However, we did not find strong evidence that participants’ own SES had an effect on their judgments. Overall, rather than sustainability being considered a blanket obligation that is applicable across people and contexts, people typically ascribe more moral responsibility when sustainability is not financially burdensome.
... Prosocial disposition, or prosocial behavior, includes all interpersonal actions aimed at benefiting others and is characterized by its altruistic nature and focus on positive outcomes for others (Habashi et al., 2016;Rapert et al., 2021). It is closely associated with morality than self-interest and involves personal sacrifice and voluntary acts that result in both individual and collective benefits (Berman et al., 2020;Berman and Silver, 2022;Jin et al., 2021). Tourists engage in various prosocial behaviors that benefit tourist destinations and are driven by motivations such as pleasure seeking, guilt avoidance, self-perception improvement, personal growth, interpersonal relationships, and subjective well-being (Bauer et al., 2019;Dhiman and Kumar, 2023). ...
... Tourists engage in various prosocial behaviors that benefit tourist destinations and are driven by motivations such as pleasure seeking, guilt avoidance, self-perception improvement, personal growth, interpersonal relationships, and subjective well-being (Bauer et al., 2019;Dhiman and Kumar, 2023). These voluntary actions are crucial for destinations, as they foster positive outcomes directly through tourists' actions and indirectly by inspiring local residents to imitate these behaviors to fulfill their own need to help (Anik et al., 2009;Berman et al., 2020;Habashi et al., 2016). Rapert et al. (2021) identified four types of prosocial behavior within prosocial dispositions: social responsibility, empathic concern, moral reasoning, and past helpfulness. ...
This study explores the factors influencing tourist citizenship behavior (TCB) at destinations-voluntary actions by tourists that support the destination's well-being. Grounded in social exchange and equity theories, it examines individual traits (prosocial disposition) and destination factors (perceived justice) as drivers of TCB, along with its effect on tourists' patronage intentions. Two structural equation models were applied to tourist data, revealing that both self-perception and perceived justice significantly impact TCB. Notably, perceived justice plays a critical role, shifting explanatory power from traits like social responsibility and empathy, highlighting fairness perceptions as central to TCB. TCB positively influences the likelihood of destination revisits and recommendations, offering insights for destination managers to foster positive tourist behaviors and long-term relationships through equitable practices.
... 2.2 | Social comparison, spare money, and perceived social responsibility Since inequality is perceived as unfair among those in an inferior position (Brandt, 2013;Newman et al., 2015;Van Doesum et al., 2017) and people overestimate how earning more income generates supplementary spare money (Berman et al., 2016;Zauberman & Lynch, 2005), those in an inferior socioeconomic condition will infer that others in a wealthier position have more left-over resources to give to charity (Berman et al., 2020). The sense of distributive fairness implies that higher earners should proportionally pay higher taxes, thus maximizing social welfare (Diamond & Saez, 2011;Heathcote et al., 2017), which allows those in an inferior condition to pass the obligation for virtuous actions to wealthier others (Belmi & Laurin, 2016;Kraus et al., 2009). ...
... using a slider scale ranging from $0 to $100.4.1.4 | Measured variablesBesides the spare money measure used in Study 1, we also included a measure adapted fromBerman et al. (2020) of how much spare money they (vs. others) have in a 7-point scale (1 = very little spare money; 7 = a lot of spare money). ...
The increasing inequality rate within countries worldwide makes social comparisons more evident. In seven experiments, we demonstrate that people comparing themselves to others in a superior socioeconomic position (upward comparison) judge that wealthier others should donate more time and money to charity. However, social comparison to others in an inferior position (downward comparison) does not always increase monetary donations. This discrepancy in prescriptions for monetary donations between those who make upward and downward social comparisons is driven by judgments about relative spare money; while people making upward comparisons believe that others have more spare money, people making downward comparisons only think they have more spare money, and should donate more, when reminded of their hierarchical position at the time of judgment. Low meritocracy beliefs exacerbate the difference between the prescriptions of how much oneself and others should donate given their socioeconomic position. This differential pattern among individuals making upward and downward social comparisons helps to propagate economic inequality. People making upward comparisons prescribe to wealthier others the responsibility to donate to charity, who in turn may not think they should donate more money. These findings have implications for charitable and non‐profit organizations and contribute to research on social comparison, inequality, and judgments about monetary and time donations.
... Reminding investors of portfolio gains could make them feel empowered and less vulnerable, which may decrease their prosocial inclinations [26] . Additionally, individuals expect those who earn more than them to be ethically obligated to also donate more, yet "those higher earners themselves report having little to spare, and thus apply lower donation standards to themselves" [27] . Similarly, we found that investors who were reminded of their positive investment returns, and thus may feel they are high earners, donate less if they have low prosocial leaning. ...
This study investigates the effect of investment priming on individuals’ donations to social causes. Using two field experiments, we examine donations to a plant-a-tree program of 1,480 investors who had invested in portfolios with large positive returns in the previous financial year. We compare the donations of investors who were reminded of their portfolio's returns (investment prime) before the donation request with those of investors who were not reminded of their portfolio's returns. We find that investment priming reduced the donations of non-prosocial investors who do not regularly donate to charities or invest in environmental funds. And among prosocial investors, we find that investment priming had no effect on donations. These findings extend previous research on money priming by suggesting that drawing investors’ attention to their investment gains may weaken their willingness to share their wealth and donate to social causes.
... The number of resources that consumers have available to them, is a crucial determinant of donation behavior (Berman et al., 2020). It has been reported that elders are more financially stable and wealthier than younger samples (Moschis, 1992). ...
Purpose
This paper aims to investigate the donor characteristics of Muslim donors and fills the gap by empirically surveying Muslim donors from Kuwait. The authors believe their sample choice to be of importance due to the stark contrast between the Kuwaiti and Asian environment, of which much of the literature’s findings on Muslim donor behavior was based on.
Design/methodology/approach
The characteristics studied include demographics, socioeconomics, individual attitudes, trust perceived generosity among others identified in the literature. Data was gathered by disseminating 320 surveys to better understand which variables have significant influence on an individual’s charity behavior. Statistical analysis using regression method was used to analyze the data.
Findings
The findings report that fundraising campaigns, perceived financial security are significant and there is also a significant association between certain charity activities and gender. The findings have implications on market segmentation and promotional strategies aimed toward similar donor profiles and for the charities soliciting Zakat who are based in the Gulf Cooperation Council region.
Originality/value
The contributions of this manuscript further the knowledge of donor behavior and thus enrich the body of work within research that explores the role of marketing in philanthropic and non-profit organizations. This study provides deeper insights into the Muslim’s donor behavior and from a managerial standpoint, facilitates on how to target them effectively when soliciting donations or raising funds for campaigns within Muslim communities, an area that has received little attention from research investigating marketing for nonprofit organizations.
... The likelihood of financially contributing to agencies also relies heavily on individual interests and willingness to pay, both of which are influenced by sociodemographic factors (e.g., income level, gender, and age; Jacobson et al. 2010). Although the link between sociodemographic variables and financial contributions is debated (Veríssimo et al. 2018), income, gender, and age have all been explored as factors influencing conservation funding (e.g., Tindall et al. 2003;Martín-López et al. 2007;Agarwal et al. 2009;Berman et al. 2020). Further, despite anecdotal evidence of nonconsumptive recreationists sometimes voluntarily choosing to fund conservation through user-pay mechanisms (e.g., birders purchasing the Federal Duck Stamp; Shipley et al. 2019), few data are available on the recreation identities of the contributors to user-pay and voluntary mechanisms. ...
North American fish and wildlife management has long been supported by the financial contributions of anglers and hunters to state fish and wildlife agencies; however, stagnation in angling participation and declines in hunting participation threaten the stability of this user‐pay support system. While engaging recreationists beyond those with consumptive interests may assist in addressing limitations of the current user‐pay benefit approach, anecdotal evidence suggests differences in recreationists' familiarity with agencies, and perceived benefits of financial contributions may dissuade certain wildlife recreationists from providing agency support. Using focus groups (n = 83) and a survey (n = 1,016) of Virginia residents, we explored how recreationists' familiarity with an agency differed among three categories of wildlife recreationists (i.e., recreation groups)—consumptive (anglers and hunters), nonconsumptive (birders and other wildlife viewers), and multi‐recreationists (those who participate in both consumptive and nonconsumptive activities)—relative to non‐wildlife recreationists (those who do not participate in fish and wildlife recreation). We further examined whether familiarity with an agency and recreation group influenced the future likelihood of financial contributions across voluntary (not required for access or use of natural resources) and user‐pay (required for access or use of natural resources) funding mechanisms. We found that consumptive recreationists and multi‐recreationists had greater familiarity with the agency than nonconsumptive recreationists. Approximately 40% of nonconsumptive recreationists were likely to support the agency through either user‐pay or voluntary mechanisms, while approximately 80% of consumptive recreationists preferred user‐pay mechanisms. Further, all recreationists expected tangible outcomes from their contributions and transparency about how their contributions would benefit their activities (e.g., newsletters detailing angling access funded by their support). We recommend that agencies build familiarity among wildlife recreationists, especially within their nonconsumptive constituency, and demonstrate how current funding mechanisms benefit and are derived from multiple recreation groups.
... Other work has compared the level of wealth of donors in relation to the lack of wealth of the recipient (Van Rijn et al., 2017). Some recent research did examine how donors compare their wealth to that of others but mainly investigated how much richer others should give and the perception of spare money and financial slack (Berman et al., 2020). Here, we take a novel approach by investigating how differences in wealth among donors shape giving. ...
Five experiments examined the role of resource evaluability on giving. We systematically varied participants' resources they and another potential donor received and whether they could donate to a recipient either by themselves or with the other donor. Participants in the relative advantage condition received more resources than the other donor, and those in the relative disadvantage condition received fewer resources than the other donor. The presence of the other donor made participants' resources evaluable and shaped giving: Relatively disadvantaged participants were proportionally more generous than advantaged participants but only when they could evaluate their resources. Neither the mere presence of others nor reputational concerns could explain the results. Exploratory mediation and moderation analyses further showed that relatively disadvantaged participants give proportionally more the higher and the more equal they perceive their status to the advantaged donor. This shows that the generosity of those who have less does depend on how they evaluate their status compared to other donors. Our results provide insights into the question of why and when resource asymmetries between donors result in prosocial giving and can influence fundraising strategies of charitable organizations.
... In such a situation, the responsibility to help is perceived to be split between all bystanders meaning that the personal responsibility to help is smaller, than when one is the only potential helper. One study found that people (no matter their own financial situation) believed that those richer than themselves had a responsibility to help more (Berman et al., 2020). Moreover, people in countries with a sophisticated welfare system tend to believe that the governments are responsible for providing health care and social services to those worse off, and consequently perceive a weaker personal responsibility to help (Nelson et al., 2006;Vamstad & von Essen, 2013). ...
Charitable giving, volunteering, climate-friendly choices, and most recently changing one’s lifestyle to stop the spread of the coronavirus are all examples of prosocial behavior. Prosociality can be investigated from different perspectives including the “who-question” (which people are more likely to help), and the “when-question” (which situational factors stimulate helping?), but in this article we focus primarily on the “why-question” (which emotions and cognitions motivate helping?)Specifically, this article tries to organize and synthesize literature related to emotions, thoughts, and beliefs (i.e. psychological mechanisms) that motivate or demotivate human helping behavior. To do this, we present a new typology including four overarching interrelated categories, each encompassing multiple subcategories.(1) Emotions: (a) emotional reactions elicited by the need situation such as empathic concern/sympathy, (b) positive or negative attitudes toward the beneficiary or the requester, (c) incidental mood. (2) Moral principles: (a) personal responsibility, (b) fairness-concerns, (c) aversion towards causing harm. (3) Anticipated impact: (a) self-efficacy (e.g. “can I make a difference?”) and (b) response-efficacy (e.g., “is this cause/project efficient and worthwhile?”). (4) Anticipated personal consequences: (a) material, (b) social and (c) emotional costs and benefits that the helper expects will follow if she helps or if she does not help. Increased knowledge about the “who” (e.g. individual differences in demography or personality) and “when” (situational antecedents such as characteristic of those in need, or type of solicitation) can surely help predict and even increase prosociality, but we argue that to understand the psychology of helping we need to also consider the psychological mechanisms underlying prosocial decisions (the “why-question”).We compare our typology against related theoretical frameworks, and present the pros and cons with different methodological approaches of testing psychological mechanisms of helping, with the aim to help researchers and practitioners better organize and understand the many psychological factors that influence prosocial decisions.
... Although people have some ideas about how much they and others should be contributing, these judgments are often vague and self-serving. For example, most people believe that they themselves are excused from donating anything beyond a trivial amount of money to charity, instead arguing that the burden ought to fall on those earning more money than themselves [68]. ...
One reason people engage in prosocial behavior is to reap the reputational benefits associated with being seen as generous. Yet, there isn’t a direct connection between doing good deeds and being seen as a good person. Rather, prosocial actors are often met with suspicion, and sometimes castigated as disingenuous braggarts, empty virtue-signalers, or holier-than-thou hypocrites. In this article, we review recent research on how people evaluate those who engage in prosocial behavior and identify key factors that influence whether observers will praise or denigrate a prosocial actor for doing a good deed.
... The amount of resources that consumers have available to allocate is an important driver of donation behavior (Berman et al. 2020;Dovidio et al. 2006;Sober and Wilson 1999). Since donation behavior requires consumers to direct resources away from the self and toward others, consumers should be more (vs. ...
Despite the growing concerns regarding the increasing consumerism related to promotions, this research documents a positive effect of price promotions on consumers’ donation behavior. Specifically, the authors propose that price promotions increase consumers’ perceived resources, which in turn increase consumers’ donation behavior. A series of seven studies, combining field and experimental data, provide converging support for this proposition and its underlying mechanism of perceived resources. Further, the authors show that the positive effect of price promotions on consumers’ donation behavior is attenuated when consumers focus on the amount of money spent (rather than saved), when consumers feel they have overspent their budget, and when the monetary savings cannot be realized immediately. Finally, the authors show that this effect is stronger when donation solicitation occurs immediately after the price promotion (vs. after a delay). This research documents a novel behavioral consequence of price promotions and uncovers a mechanism by which price promotions can lead to positive social consequences and contribute to a better world.
... That is, higher-earners might be comparing the target's wealth to their own, and, therefore, judging the low-wealth target more harshly because of the larger deviation from their own level of wealth. Berman, Bhattacharjee, Small, and Zauberman (2020) found similar self-reference effects in social judgments regarding wealth. Specifically, they found that the expectations of how much a target at a particular income level (e.g., $50,000/year) ought to donate to charity were much higher for participants with low versus high income. ...
Seven experiments conducted in India and the United States (N ∼7,000; 5 preregistered) examined the effects of wealth on warmth and competence, 2 fundamental dimensions of social impressions. Wealth causally influenced perceptions of a target's competence: high wealth increased perceived competence and low wealth decreased perceived competence (Experiments 1-3). Furthermore, both high and low wealth reduced perceived warmth compared with control conditions that provided no wealth-related information (Experiments 2 and 3). Attributing prosocial tendencies to the target in the form of charitable donations reversed wealth-induced reductions in warmth, while low levels of charitable donations lowered both perceived warmth and competence (Experiment 3). Reciprocally, information about the target's competence or warmth influenced how wealthy they were perceived to be (Experiment 4). Knowing the source of wealth (e.g., entrepreneurship, corporate fraud, inheritance) also affected perceptions of competence and warmth (Experiments 5 and 6). Moreover, participants expressed greater willingness to hire wealthier targets compared with poorer targets in hypothetical employment scenarios, a relationship mediated by perceived competence, suggesting that an individual's wealth may influence consequential assessments and decisions (Experiment 7). With rising economic inequality, it is crucial to understand how wealthy and poor individuals are perceived and the implications of these perceptions. The present experiments offer insight in this direction. (PsycInfo Database Record (c) 2020 APA, all rights reserved).
This theoretical article summarizes the various psychological and motivational processes that underlie prosocial decision-making. To this aim, we propose a novel way to organize and synthesize research related to emotions, thoughts, and beliefs (i.e., psychological mechanisms) that motivate or demotivate human prosociality. This is done with a new typology including four overarching interrelated categories, each encompassing multiple subcategories: (a) emotions; (b) moral principles; (c) anticipated impact; and (d) anticipated personal consequences. We highlight differences and commonalities to other influential frameworks and showcase how the proposed typology can help researchers and practitioners better differentiate and understand the diverse psychological mechanisms that underlie human prosociality.
This article on raising wealthy children to be philanthropic is prompted by the £5.5Tn wealth transfer predicted to take place in the United Kingdom over the coming decades. The impending wealth transfer presents an unprecedented income opportunity for a charity sector faced with increasing societal needs and declining statutory income. Drawing on the premise that engaging children in philanthropic activities can lead to higher participation levels in adulthood, this paper examines how children from wealthy households engage with philanthropy at home and school. A mixed‐methods approach involving research with and not on children is used to explore what kind of philanthropic citizen these children are becoming. Two surveys, five focus groups, and four interviews were used to generate insights from 222 ‘financially secure’ 9 to 11‐year‐old children, 113 parents and four teachers. The study, drawing on models of citizenship, finds a cohort of children exhibiting characteristics aligned with the concept of ‘personally responsible’ philanthropic citizens. This outcome is considered desirable for promoting charitable giving among a demographic likely to have the means and resources to give generously in adulthood. However, the findings suggest a lack of opportunities for children to acquire the knowledge and skills that enable informed giving decisions or the spaces in which to critically engage with charities, causes, and the issues that create the need for philanthropy in the first place. The research supports calls in the literature for a more participatory and social‐justice‐oriented approach to philanthropic education and participation in schools. The findings, of interest to scholars and practitioners alike, address a gap in empirical evidence regarding children and philanthropy in the United Kingdom.
Consumer psychology refers to how people think and act within an economic role in market exchange. However, we know little about how consumers actually perceive these roles, or how they understand markets and economic activity more broadly. That is, we lack an understanding of the economic reasoning of non‐expert consumers, how it departs from formal economic reasoning, and why. The current paper is intended to address this gap. We provide an integrative review of research on lay economic reasoning that consistently reveals how differently lay consumers and economists think about markets. We propose a unifying mental model to explain these divergences. Suggest why it is reinforced by what lay consumers observe (and do not observe) through firsthand marketplace experience, and note its potential evolutionary basis. We then highlight how understanding lay economic reasoning can not only help explain a wide array of marketplace phenomena, but also provide a novel lens to help advance, generate, and better integrate theory across many active literatures within consumer psychology. Without markets, there are no consumers and there is no marketing. We therefore call for consumer psychologists to take ownership of the study of lay economic reasoning and make markets more central to marketing scholarship.
The conservation flagship approach is a valuable tool for raising funds and awareness, but species-based campaigns have been criticized for providing little benefit to wider biodiversity. One possible solution is to use conservation areas as flagships, but we lack data on the types of area that most appeal to potential donors. Here, we used an online choice experiment involving hypothetical overseas conservation areas to investigate how respondents value a series of conservation area attributes. We calculated the average willingness to pay for each attribute and assessed preference heterogeneity. Our results suggest that community ownership is valued the most, followed by the presence of threatened bird species, low current funding in the conservation area, the presence of charismatic mammals, and charity ownership. Respondents could be divided into three groups, based on their education, environmental organization membership and income. The group of respondents who were less wealthy and were members of environmental organizations were not willing to pay for this kind of conservation action, suggesting that flagship area campaigns targeted at them should encourage other types of involvement. The other two groups, which included respondents who were less engaged in conservation (neither group included environmental organization members, with one group less wealthy and less educated, and the other wealthier), found community ownership particularly appealing, suggesting that many potential donors may be driven by social concerns. This is a key finding and suggests flagship conservation areas could attract a new audience of donors, helping to support current global efforts to increase the management effectiveness, connectivity and extent of protected areas and land under other effective area-based conservation measures.
Seven studies provide evidence of an availability bias in people’s assessments of the benefits they’ve enjoyed and the barriers they’ve faced. Barriers and hindrances command attention because they have to be overcome; benefits and resources can often be simply enjoyed and largely ignored. As a result of this “headwind/tailwind” asymmetry, Democrats and Republicans both claim that the electoral map works against them (Study 1), football fans take disproportionate note of the challenging games on their team’s schedules (Study 2), people tend to believe that their parents have been harder on them than their siblings are willing to grant (Study 3), and academics think that they have a harder time with journal reviewers, grant panels, and tenure committees than members of other subdisciplines (Study 7). We show that these effects are the result of the enhanced availability of people’s challenges and difficulties (Studies 4 and 5) and are not simply the result of self-serving attribution management (Studies 6 and 7). We also show that the greater salience of a person’s headwinds can lead people to believe they have been treated unfairly and, as a consequence, more inclined to endorse morally questionable behavior (Study 7). Our discussion focuses on the implications of the headwind/tailwind asymmetry for a variety of ill-conceived policy decisions.
Could liquid wealth, or "cash on hand"-the balance of one's checking and savings accounts-be a better predictor of life satisfaction than income? In a field study using 585 U.K. bank customers, we paired individual Satisfaction With Life Scale responses with anonymized account data held by the bank, including the full account balances for each respondent. Individuals with higher liquid wealth were found to have more positive perceptions of their financial well-being, which, in turn, predicted higher life satisfaction, suggesting that liquid wealth is indirectly associated with life satisfaction. This effect persisted after accounting for multiple controls, including investments, total spending, and indebtedness (which predicted financial well-being) and demographics (which predicted life satisfaction). Our results suggest that having readily accessible sources of cash is of unique importance to life satisfaction, above and beyond raw earnings, investments, or indebtedness. Therefore, to improve the well-being of citizens, policymakers should focus not just on boosting incomes but also on increasing people's immediate access to money. (PsycINFO Database Record
Most people are caring and will exert great effort to rescue individual victims whose needy plight comes to their attention. These same good people, however, often become numbly indifferent to the plight of individuals who are "one of many" in a much greater problem. Why does this occur? The answer to this question will help us answer a related question that is the topic of this paper: Why, over the past century, have good people repeatedly ignored mass murder and genocide? Every episode of mass murder is unique and raises unique obstacles to intervention. But the repetitiveness of such atrocities, ignored by powerful people and nations, and by the general public, calls for explanations that may reflect some fundamental deficiency in our humanity - a deficiency that, once identified, might possibly be overcome. One fundamental mechanism that may play a role in many, if not all, episodes of mass-murder neglect involves the capacity to experience affect, the positive and negative feelings that combine with reasoned analysis to guide our judgments, decisions, and actions. I shall draw from psychological research to show how the statistics of mass murder or genocide, no matter how large the numbers, fail to convey the true meaning of such atrocities. The reported numbers of deaths represent dry statistics, "human beings with the tears dried off," that fail to spark emotion or feeling and thus fail to motivate action. Recognizing that we cannot rely only upon our moral feelings to motivate proper action against genocide, we must look to moral argument and international law. The 1948 Genocide Convention was supposed to meet this need, but it has not been effective. It is time to examine this failure in light of the psychological deficiencies described here and design legal and institutional mechanisms that will enforce proper response to genocide and other forms of mass murder.
According to the hedonic treadmill model, good and bad events temporarily affect happiness, but people quickly adapt back to hedonic neutrality. The theory, which has gained widespread acceptance in recent years, implies that individual and societal efforts to increase happiness are doomed to failure. The recent empirical work outlined here indicates that 5 important revisions to the treadmill model are needed. First, individuals’ set points are not hedonically neutral. Second, people have different set points, which are partly dependent on their temperaments. Third, a single person may have multiple happiness set points: Different components of well-being such as pleasant emotions, unpleasant emotions, and life satisfaction can move in different directions. Fourth, and perhaps most important, well-being set points can change under some conditions. Finally, individuals differ in their adaptation to events, with some individuals changing their set point and others not changing in reaction to some external event. These revisions offer hope for psychologists and policymakers who aim to decrease human misery and increase happiness.
This paper examines how consumers forecast their future spare money or “financial slack.” While consumers generally think that both their income and expenses will rise in the future, they underweight the extent to which their expected expenses will cut into their spare money, a phenomenon we term “expense neglect.” We test and rule out several possible explanations, and conclude that expense neglect is due in part to insufficient attention towards expectations about future expenses compared to future income. “Tightwad” consumers who are chronically attuned to expenses show less severe expense neglect than “spendthrifts” who are not. We further find that expectations regarding changes in income (and not changes in expenses) predict the Michigan Index of Consumer Sentiments—a leading macro-economic indicator. Finally, we conduct a meta-analysis of our entire file-drawer (27 studies, 8,418 participants) and find that, across studies, participants place 2.9 times the weight on income change as they do on expense change when forecasting changes in their financial slack, and that expense neglect is stronger for distant than near future forecasts.
Maintaining savings is an important financial goal. Yet there are times when savings should be spent, such as when people face unavoidable costs, and spending their savings allows them to avoid high interest rate debt. Existing behavioral research has focused on consumer decisions between savings and discretionary spending and has proposed interventions to promote savings in these contexts. However, when spending is not discretionary, such interventions could risk exacerbating a pattern found in economic research in which people borrow high interest rate debt while maintaining savings that earn low levels of interest. To examine how mental accounting interacts with considerations of personal responsibility and guilt to contribute to this pattern, this article explores whether people spend their savings when they need money most: during emergencies. Six studies reveal that people's tendency to preserve savings by borrowing from a high interest rate credit option varies as a function of the savings' intended use. Paradoxically, people are most likely to turn to high interest rate credit with the belief that doing so is the responsible option.
Many articles have examined the psychological drivers of charitable giving, but little is known about how people mentally budget for charitable gifts. The present research aims to address this gap by investigating how perceptions of donations as exceptional (uncommon and infrequent) rather than ordinary (common and frequent) expenses might affect budgeting for and giving to charity. We provide the first demonstration that exceptional framing of an identical item can directly influence mental budgeting processes, and yield societal benefits. In 5 lab and field experiments, exceptional framing increased charitable behavior, and diminished the extent to which people considered the effect of the donation on their budgets. The current work extends our understanding of mental accounting and budgeting for charitable gifts, and demonstrates practical techniques that enable fundraisers to enhance the perceived exceptionality of donations. (PsycINFO Database Record
(c) 2015 APA, all rights reserved).
Tax collection is critical for the proper functioning of society. However, many people strongly dislike paying taxes. Although this distaste could be rational on economic grounds, the authors show that this attitude extends beyond simply disliking the costs incurred and affects behavior in counternormative ways. They demonstrate the phenomenon of tax aversion: a desire to avoid taxes per se that exceeds the rational economic motivation to avoid a monetary cost. Across five experiments, the authors provide evidence that people have a stronger preference to avoid tax-related costs than to avoid equal-sized (or larger) monetary costs unrelated to taxes. Tax aversion affects consumer preferences in a variety of domains, including standard store purchases, financial investments, and job selection. Furthermore, this tendency is most prevalent among people who identify with political parties that generally favor less taxation. Finally, encouraging participants who identify with "antitax" parties to consider positive uses of their tax payments mitigates tax aversion. This article concludes with a discussion of the implications of these results for consumer behavior research and tax policies.
Purchases fall along a continuum from ordinary (common or frequent) to exceptional (unusual or infrequent), with many of the largest expenses (e.g., electronics, celebrations) being the most exceptional. Across seven studies, we show that, while people are fairly adept at budgeting and predicting how much they will spend on ordinary items, they both underestimate their spending on exceptional purchases overall and overspend on each individual purchase. Based on the principles of mental accounting and choice bracketing, we show that this discrepancy arises in part because consumers categorize exceptional expenses too narrowly, construing each as a unique occurrence and consequently overspending across a series of discretely exceptional expenses. We conclude by proposing an intervention that diminishes this tendency by helping consumers consider their spending on exceptional items as part of a larger set of purchases.
Drawing in large part on the 1995 Survey of Consumer Finances, the authors describe the pattern of charitable giving by families at the upper reaches of income and wealth, as well as across the income spectrum. The overriding empirical motif is that the distribution of charitable giving is more highly skewed toward the upper end of the financial spectrum than previously documented, and that there appears to be a trend toward becoming evenmoreso.The over riding theoretical motifis that income and wealth are so thoroughly imbricated, especially at the upper end of the financial spectrum, that the analyses of the determinants of charitable giving need to shift from their current focus on the dynamics of income to a complementary focus on the dynamics of wealth.
The U-shaped income-giving profile, where those in the lower and higher income brackets give higher percentages of their income to charity, has been the subject of much dispute. Examining data from 16,442 households, the authors find clear evidence of a U-shaped relationship. Previous findings contradicting the U-shaped profile are shown to suffer from selection bias that systematically deflates reported lower-income giving levels. Although the U-shaped profile is an appropriate descriptor, it does not reflect typical household behavior. Instead, it is driven almost entirely by the 5% of households that contribute one tenth or more of their after-tax income. Traditionally, the presence of so many highly committed, low-income households has been attributed to religious sect affiliation by the poor. The authors find an additional explanation in that these highly committed, lower-income households are dramatically wealthier than other members of their income classification, in part reflecting the presence of lower-income, higher-asset, retirement-aged households.
Economists in recent decades have turned their attention to data that asks people how happy or satisfied they are with their lives. Much of the early research concluded that the role of income in determining well-being was limited, and that only income relative to others was related to well-being. In this paper, we review the evidence to assess the importance of absolute and relative income in determining well-being. Our research suggests that absolute income plays a major role in determining well-being and that national comparisons offer little evidence to support theories of relative income. We find that well-being rises with income, whether we compare people in a single country and year, whether we look across countries, or whether we look at economic growth for a given country. Through these comparisons we show that richer people report higher well-being than poorer people; that people in richer countries, on average, experience greater well-being than people in poorer countries; and that economic growth and growth in well-being are clearly related. Moreover, the data show no evidence for a satiation point above which income and well-being are no longer related.
Conducted 5 experiments to assess biases in availability of information in memory and attributions of responsibility for the actions and decisions that occurred during a previous group interaction. The S populations sampled included naturally occurring discussion groups (of undergraduates), 37 married couples, 74 female and 84 male players on intercollegiate basketball teams, and groups of undergraduates assembled in the laboratory. Data provide consistent evidence for egocentric biases in availability and attribution: The S's own contributions to a joint product were more readily available, i.e., more frequently and easily recalled, and Ss accepted more responsibility for a group product than other participants attributed to them. In addition, statements attributed to the self were recalled more accurately and the availability bias was attenuated, though not eliminated, when the group product was negatively evaluated. When another S's contributions were made more available to the S via a selective retrieval process, this S allocated correspondingly more responsibility for the group decisions to the coparticipant. The determinants and pervasiveness of the egocentric biases are considered. (27 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Despite commonsense appeal, the link between self-interest and happiness remains elusive. One reason why individuals may not feel satisfied with self-interest is that they feel uneasy about sacrificing the needs of others for their own gain. We propose that externally imposing self-interest allows individuals to enjoy self-benefiting outcomes that are untainted by self-reproach for failing to help others. Study 1 demonstrated that an imposed self-interested option (a reward) leads to greater happiness than does choosing between a self-interested option and a prosocial option (a charity donation). Study 2 demonstrated that this effect is not driven by choice in general; rather, it is the specific trade-off between benefiting the self and benefiting others that inhibits happiness gained from self-interest. We theorize that the agency inherent in choice reduces the hedonic value of self-interest. Results of Study 3 find support for this mechanism.
We hypothesize that there is a general bias, based on both innate predispositions and experience, in animals and humans, to give greater weight to negative entities (e.g., events, objects, personal traits). This is manifested in 4 ways: (a) negative potency (negative entities are stronger than the equivalent positive entities), (b) steeper negative gradients (the negativity of negative events grows more rapidly with approach to them in space or time than does the positivity of positive events, (c) negativity dominance (combinations of negative and positive entities yield evaluations that are more negative than the algebraic sum of individual subjective valences would predict), and (d) negative differentiation (negative entities are more varied, yield more complex conceptual representations, and engage a wider response repertoire). We review evidence for this taxonomy, with emphasis on negativity dominance, including literary, historical, religious, and cultural sources, as well as the psychological literatures on learning, attention, impression formation, contagion, moral judgment, development, and memory. We then consider a variety of theoretical accounts for negativity bias. We suggest that I feature of negative events that make them dominant is that negative entities are more contagious than positive entities.
Planning has pronounced effects on consumer behavior and intertemporal choice. We develop a six-item scale measuring individual differences in propensity to plan that can be adapted to different domains and used to compare planning across domains and time horizons. Adaptations tailored to planning time and money in the short run and long run each show strong evidence of reliability and validity. We find that propensity to plan is moderately domain-specific. Scale measures and actual planning measures show that for time, people plan much more for the short run than the long run; for money, short- and long-run planning differ less. Time and money adaptations of our scale exhibit sharp differences in nomological correlates; short-run and long-run adaptations differ less. Domain-specific adaptations predict frequency of actual planning in their respective domains. A "very long-run" money adaptation predicts FICO credit scores; low planners thus face materially higher cost of credit. (c) 2009 by JOURNAL OF CONSUMER RESEARCH, Inc..
A new model of consumer behavior is developed using a hybrid of cognitive psychology and microeconomics. The development of the model starts with the mental coding of combinations of gains and losses using the prospect theory value function. Then the evaluation of purchases is modeled using the new concept of “transaction utility.” The household budgeting process is also incorporated to complete the characterization of mental accounting. Several implications to marketing, particularly in the area of pricing, are developed.
The authors present an overview of the academic literature on charitable giving
based on a literature review of more than 500 articles. They structure their review
around the central question of why people donate money to charitable organizations.
They identify eight mechanisms as the most important forces that drive charitable
giving: (a) awareness of need; (b) solicitation; (c) costs and benefits; (d) altruism;
(e) reputation; (f) psychological benefits; (g) values; (h) efficacy. These mechanisms can provide a basic theoretical framework for future research explaining charitable giving.
Lower social class (or socioeconomic status) is associated with fewer resources, greater exposure to threat, and a reduced sense of personal control. Given these life circumstances, one might expect lower class individuals to engage in less prosocial behavior, prioritizing self-interest over the welfare of others. The authors hypothesized, by contrast, that lower class individuals orient to the welfare of others as a means to adapt to their more hostile environments and that this orientation gives rise to greater prosocial behavior. Across 4 studies, lower class individuals proved to be more generous (Study 1), charitable (Study 2), trusting (Study 3), and helpful (Study 4) compared with their upper class counterparts. Mediator and moderator data showed that lower class individuals acted in a more prosocial fashion because of a greater commitment to egalitarian values and feelings of compassion. Implications for social class, prosocial behavior, and economic inequality are discussed.
Self-determination theory posits that the degree to which a prosocial act is volitional or autonomous predicts its effect on well-being and that psychological need satisfaction mediates this relation. Four studies tested the impact of autonomous and controlled motivation for helping others on well-being and explored effects on other outcomes of helping for both helpers and recipients. Study 1 used a diary method to assess daily relations between prosocial behaviors and helper well-being and tested mediating effects of basic psychological need satisfaction. Study 2 examined the effect of choice on motivation and consequences of autonomous versus controlled helping using an experimental design. Study 3 examined the consequences of autonomous versus controlled helping for both helpers and recipients in a dyadic task. Finally, Study 4 manipulated motivation to predict helper and recipient outcomes. Findings support the idea that autonomous motivation for helping yields benefits for both helper and recipient through greater need satisfaction. Limitations and implications are discussed.
Consumers often set budgets for categories of expenses (e.g., entertainment) and track expenses against their budget. Because budgets cannot perfectly anticipate consumption opportunities, people may earmark too much or too little money for a particular category. This leads them to overconsume or underconsume goods in that category. The results of three studies suggest that consumers do indeed set budgets and that budgeting may lead to underconsumption. To show that consumers track expenses, the studies demonstrate that budgeting effects are larger for purchases that are highly typical of their category. Such purchases reduce the amount people spend in a category and block the purchase of other typical items. The studies control for satiation and income effects; thus, budgeting adds predictive power to standard economic consumer theory. Copyright 1996 by the University of Chicago.
Two field experiments examined the effectiveness of signs requesting hotel guests' participation in an environmental conservation program. Appeals employing descriptive norms (e.g., "the majority of guests reuse their towels") proved superior to a traditional appeal widely used by hotels that focused solely on environmental protection. Moreover, normative appeals were most effective when describing group behavior that occurred in the setting that most closely matched individuals' immediate situational circumstances (e.g., "the majority of guests in this room reuse their towels"), which we refer to as provincial norms. Theoretical and practical implications for managing proenvironmental efforts are discussed. (c) 2008 by JOURNAL OF CONSUMER RESEARCH, Inc..
This article proposes an informational perspective on comparison consequences in social judgment. It is argued that to understand the variable consequences of comparison, one has to examine what target knowledge is activated during the comparison process. These informational underpinnings are conceptualized in a selective accessibility model that distinguishes 2 fundamental comparison processes. Similarity testing selectively makes accessible knowledge indicating target-standard similarity, whereas dissimilarity testing selectively makes accessible knowledge indicating target-standard dissimilarity. These respective subsets of target knowledge build the basis for subsequent target evaluations, so that similarity testing typically leads to assimilation whereas dissimilarity testing typically leads to contrast. The model is proposed as a unifying conceptual framework that integrates diverse findings on comparison consequences in social judgment.
This research reports an investigation of the use of standardized regression (beta) coefficients in meta-analyses that use correlation coefficients as the effect-size metric. The investigation consisted of analyzing more than 1,700 corresponding beta coefficients and correlation coefficients harvested from published studies. Results indicate that, under certain conditions, using knowledge of corresponding beta coefficients to impute missing correlations (effect sizes) generally produces relatively accurate and precise population effect-size estimates. Potential benefits from applying this knowledge include smaller sampling errors because of increased numbers of effect sizes and smaller nonsampling errors because of the inclusion of a broader array of research designs.
The authors demonstrate that people discount delayed outcomes as a result of perceived changes over time in supplies of slack. Slack is the perceived surplus of a given resource available to complete a focal task. The present research shows that, in general, people expect slack for time to be greater in the future than in the present. Typically, this expectation of growth of slack in the future is more pronounced for time than for money. In 7 experiments, the authors demonstrate that systematic temporal shifts of perceived slack determine the extent and the pattern of delay discounting, including hyperbolic discounting. They use this framework to explain differential propensity to delay investments and receipts of time and money.
The belief that high income is associated with good mood is widespread but mostly illusory. People with above-average income
are relatively satisfied with their lives but are barely happier than others in moment-to-moment experience, tend to be more
tense, and do not spend more time in particularly enjoyable activities. Moreover, the effect of income on life satisfaction
seems to be transient. We argue that people exaggerate the contribution of income to happiness because they focus, in part,
on conventional achievements when evaluating their life or the lives of others.
Civil societies function because people pay taxes and make charitable contributions to provide public goods. One possible
motive for charitable contributions, called “pure altruism,” is satisfied by increases in the public good no matter the source
or intent. Another possible motive, “warm glow,” is only fulfilled by an individual's own voluntary donations. Consistent
with pure altruism, we find that even mandatory, tax-like transfers to a charity elicit neural activity in areas linked to
reward processing. Moreover, neural responses to the charity's financial gains predict voluntary giving. However, consistent
with warm glow, neural activity further increases when people make transfers voluntarily. Both pure altruism and warm-glow
motives appear to determine the hedonic consequences of financial transfers to the public good.
Self-control, mental accounting, and framing are incorporated in a behavioral enrichment of the life-cycle theory of saving called the behavioral life-cycle hypothesis. The key assumption of the behavioral life-cycle theory is that households treat components of their wealth as nonfungible, even in the absence of credit rationing. Specifically, wealth is assumed to be divided into three mental accounts: current income, current assets, and future income. The temptation to spend is assumed to be greatest for current income and least for future income. Considerable empirical support for the behavioral life-cycle theory is presented, primarily drawn from published econometric studies. Copyright 1988 by Oxford University Press.
We demonstrate that people discount delayed task outcomes due to perceived changes over time in supplies of slack. Slack is the perceived surplus of a given resource available to complete a focal task. For temporally near events, investing a resource for one purpose may cause one to fail to attain other short-term goals requiring the same resource, but only if little slack exists. If people foresee less resource competition in the future, they will appear to discount that resource steeply. We use this framework to explain differential propensity to delay investments of time and money. In seven experiments, we demonstrate that systematic temporal shifts of perceived slack determine the extent and the pattern of delay discounting.
Peter Singer's books and ideas have been disturbing our complacency ever since the appearance of Animal Liberation. Now he directs our attention to a new movement in which his own ideas have played a crucial role: effective altruism. Effective altruism is built upon the simple but profound idea that living a fully ethical life involves doing the "most good you can do." Such a life requires an unsentimental view of charitable giving: to be a worthy recipient of our support, an organization must be able to demonstrate that it will do more good with our money or our time than other options open to us. Singer introduces us to an array of remarkable people who are restructuring their lives in accordance with these ideas, and shows how living altruistically often leads to greater personal fulfillment than living for oneself. The Most Good You Can Do develops the challenges Singer has made, in the New York Times and Washington Post, to those who donate to the arts, and to charities focused on helping our fellow citizens, rather than those for whom we can do the most good. Effective altruists are extending our knowledge of the possibilities of living less selfishly, and of allowing reason, rather than emotion, to determine how we live. The Most Good You Can Do offers new hope for our ability to tackle the world's most pressing problems.
Prosocial consumer behavior refers to purchase behavior involving self-sacrifice for the good of others or of society. The research builds off both classic social psychology research on helping and research from the judgment and decision making literature on factors that distort optimal decision making. The research highlights the myriad types of motivation that induce prosocial behavior, including extrinsic rewards, reputational benefits, the pursuit of pleasure, and the avoidance of distress. In this article, we review recent findings in this area we and discuss two emerging topics: 1) how consumers judge themselves and others who behave prosocially and 2) how consumers respond to corporate partnerships with charity.
Mental budgeting (also known as mental accounting) has examined how consumers allocate and expend resources. However, the mental budgeting literature has not yet examined the availability and use of mental budgets for philanthropic, as opposed to day-to-day, consumption. Depth interviews with donors in both the United States and Canada reveal that donors do maintain mental budgets for philanthropy, that charitable gifts are expensed against the mental budget for philanthropy as well as against other budgets, and that donors’ mental budgets are malleable. Study findings extend the literature on the management and malleability of mental budgets, and provide insight to nonprofit organizations (NPO) to better position appeals to maximize donations and strengthen long-term donor relationships.
Hedonic adaptation refers to a reduction in the affective intensity of favorable and unfavorable circumstances. This chapter discusses the purposes, underlying mechanisms, and most common functional representations of hedonic adaptation. The authors then examine some of the methodological problems that hamper research in this area and review the literature on adaptation in 4 negative domains (noise, imprisonment, bereavement, and disability), and 4 positive domains (foods, erotic images, increases in wealth, and improvements in appearance produced by cosmetic surgery). Following this review, the authors discuss several circumstances that promote or impede hedonic adaptation. They conclude by discussing the dark side of hedonic adaptation—the negative consequences for individuals and society. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
This paper conducts two natural field experiments to test inter-temporal choices in charitable giving by varying the timing of commitment and payment. Monthly donors were asked to increase their contributions (1) immediately, (2) in one month, (3) in two months. The results are consistent between the two field experiments; first, mean increases in donations are significantly higher when donors are asked to commit to future donations. Second, follow-up data shows that the treatment effect is persistent, making the strategy highly profitable to the charity. Finally, I provide evidence of heterogeneity in the response to different time lags, indicating differences in inter-temporal choices among donors.Research highlights► Charities can boost donations by allowing donors to commit to future donations. ► The commitment mechanism significantly increases average donations. ► Follow-up data reveals that there treatment effect is persistent in the long-run. ► There are heterogeneous treatment effects across observed donor characteristics.
This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. Using data from the 2009 TNS Global Economic Crisis survey, we document widespread financial weakness in the United States: Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans. If we consider the respondents who report being certain or probably not able to cope with an ordinary financial shock of this size, we find that nearly half of Americans are financially fragile. While financial fragility is more severe among those with low educational attainment and no financial education, families with children, those who suffered large wealth losses, and those who are unemployed, a sizable fraction of seemingly “middle class” Americans also judge themselves to be financially fragile. We examine the coping methods people use to deal with shocks. While savings is used most often, relying on family and friends, using formal and alternative credit, increasing work hours, and selling items are also used frequently to deal with emergencies, especially for some subgroups. Household finance researchers must look beyond precautionary savings to understand how families cope with risk. We also find evidence of a “pecking order” of coping methods in which savings appears to be first in the ordering. Finally, the paper compares the levels of financial fragility and methods of coping among eight industrialized countries. While there are differences in coping ability across countries, there is general evidence of a consistent ordering of coping methodsInstitutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
We study the influence of perceived descriptive social norms on subsequent giving behavior to nonprofits, explore how social information can influence these norms, and provide insight for fundraising practice. A survey conducted in a nonprofit organization first shows that donors use their beliefs about the descriptive social norm to inform their own donation behavior. Donors who believe that others make high contributions tend to make high contributions themselves. Next, a laboratory experiment demonstrates the influence of social information on the descriptive social norm and consequently on giving. These results suggest strategies for fundraising practice. Informing donors of contributions made by another person influences their perceptions about the descriptive social norm, which in turn influences their giving behavior. We conclude with a discussion of theoretical and practical implications.
Anew model of consumer behavior is developed using a hybrid of cognitive psychology and microeconomics. The development of the model starts with the mental coding of combinations of gains and losses using the prospect theory value function. Then the evaluation of purchases is modeled using the new concept of “transaction utility.” The household budgeting process is also incorporated to complete the characterization of mental accounting. Several implications to marketing, particularly in the area of pricing, are developed.
This article was originally published in Marketing Science, Volume 4, Issue 3, pages 199–214, in 1985.
To properly consider the opportunity costs of a purchase, consumers must actively generate the alternatives that it would displace. The current research suggests that consumers often fail to do so. Even under conditions promoting cognitive effort, various cues to consider opportunity costs reduce purchase rates and increase the choice share of more affordable options. Sensitivity to such cues varies with chronic dispositional differences in spending attitudes. We discuss the implications of these results for the marketing strategies of economy and premium brands. (c) 2009 by JOURNAL OF CONSUMER RESEARCH, Inc..
The authors extend research and theory on self prediction into the realm of personal financial behavior. Four studies examined people's ability to predict their future personal spending and the findings supported the two main hypotheses. First, participants tended to underestimate their future spending. They predicted spending substantially less money in the coming week than they actually spent or than they remembered spending in the previous week. Second, the prediction bias stemmed from people's savings goals-defined as the general desire to save money or minimize future spending-at the time of prediction. Participants who reported (Studies 2 and 3) or were induced to experience (Study 4) a stronger savings goal predicted they would spend less money. However, savings goals were not related to actual spending and thus contributed to the bias in prediction.
This paper explores the consequences of cognitive dissonance, coupled with time-inconsistent preferences, in an intertemporal decision problem with two distinct goals: acting decisively on early information (vision) and adjusting flexibly to late information (flexibility). The decision maker considered here is capable of manipulating information to serve her self-interests, but a tradeoff between distorted beliefs and distorted actions constrains the extent of information manipulation. Building on this tradeoff, the present model provides a unified framework to account for the conformity bias (excessive reliance on precedents) and the confirmatory bias (excessive attachment to initial perceptions).
Analysis of decision making under risk has been dominated by expected utility theory, which generally accounts for people's actions. Presents a critique of expected utility theory as a descriptive model of decision making under risk, and argues that common forms of utility theory are not adequate, and proposes an alternative theory of choice under risk called prospect theory. In expected utility theory, utilities of outcomes are weighted by their probabilities. Considers results of responses to various hypothetical decision situations under risk and shows results that violate the tenets of expected utility theory. People overweight outcomes considered certain, relative to outcomes that are merely probable, a situation called the "certainty effect." This effect contributes to risk aversion in choices involving sure gains, and to risk seeking in choices involving sure losses. In choices where gains are replaced by losses, the pattern is called the "reflection effect." People discard components shared by all prospects under consideration, a tendency called the "isolation effect." Also shows that in choice situations, preferences may be altered by different representations of probabilities. Develops an alternative theory of individual decision making under risk, called prospect theory, developed for simple prospects with monetary outcomes and stated probabilities, in which value is given to gains and losses (i.e., changes in wealth or welfare) rather than to final assets, and probabilities are replaced by decision weights. The theory has two phases. The editing phase organizes and reformulates the options to simplify later evaluation and choice. The edited prospects are evaluated and the highest value prospect chosen. Discusses and models this theory, and offers directions for extending prospect theory are offered. (TNM)