Saving money: Do consumers spend less if they think about the future?

March 31, 2015

Why is it so hard for consumers to save money? According to a new study in the Journal of Consumer Research, consumers are often impatient and do not think about the long-term consequences of spending money.

"We've known that being aware of the benefits of not spending and being patient contribute to savings, but our research finds that one or the other is not enough. For consumers to be motivated to save money, they need to both consider the future financial consequences and care enough about their financial future when spending money," write authors Daniel M. Bartels and Oleg Urminsky (both University of Chicago Booth School of Business).

In a series of studies, the authors examined how consumers spend money when they think about the future. In one study, consumers were asked to choose between a more expensive product and a cheaper alternative in six different product categories. When consumers first ranked the categories by importance (prompting them to consider other uses for their money) and read about their future selves (emphasizing that their identity was stable over time), they spent less on the categories they had ranked as least important.

Making consumers think about and value the future didn't simply make people stingy. It caused them to spend more wisely--to make better financial decisions by focusing their spending only on what was really important to them.

When consumers think about saving money, it may help to be reminded of the future. Thinking and caring about the future could help you to buy only what is important to you and save more and invest in your future instead of overspending on immediate pleasures.

"Efforts to get consumers to think more about their own future or to value future outcomes without pointing out the tradeoffs resulting from current decisions might not be enough. The best way to help consumers avoid overspending is to get them to both care about the future and recognize how their current behaviors affect the future," the authors conclude.
-end-
Daniel M. Bartels and Oleg Urminsky. "To Know and to Care: How Awareness and Valuation of the Future Jointly Shape Consumer Spending." Journal of Consumer Research: April 2015. For more information, contact Daniel Bartels (bartels@uchicago.edu) or visit http://ejcr.org/.

University of Chicago Press Journals

Related Consumers Articles from Brightsurf:

When consumers trust AI recommendations--or resist them
The key factor in deciding how to incorporate AI recommenders is whether consumers are focused on the functional and practical aspects of a product (its utilitarian value) or on the experiential and sensory aspects of a product (its hedonic value).

Do consumers enjoy events more when commenting on them?
Generating content increases people's enjoyment of positive experiences.

Why consumers think pretty food is healthier
People tend to think that pretty-looking food is healthier (e.g., more nutrients, less fat) and more natural (e.g., purer, less processed) than ugly-looking versions of the same food.

How consumers responded to COVID-19
The coronavirus pandemic has been a catalyst for laying out the different threats that consumers face, and that consumers must prepare themselves for a constantly shifting landscape moving forward.

Is less more? How consumers view sustainability claims
Communicating a product's reduced negative attribute might have unintended consequences if consumers approach it with the wrong mindset.

In the sharing economy, consumers see themselves as helpers
Whether you use a taxi or a rideshare app like Uber, you're still going to get a driver who will take you to your destination.

Helping consumers in a crisis
A new study shows that the central bank tool known as quantitative easing helped consumers substantially during the last big economic downturn -- a finding with clear relevance for today's pandemic-hit economy.

'Locally grown' broccoli looks, tastes better to consumers
In tests, consumers in upstate New York were willing to pay more for broccoli grown in New York when they knew where it came from, Cornell University researchers found.

Should patients be considered consumers?
No, and doing so can undermine efforts to promote patient-centered health care, write three Hastings Center scholars in the March issue of Health Affairs.

Consumers choose smartphones mostly because of their appearance
The more attractive the image and design of the telephone, the stronger the emotional relationship that consumers are going to have with the product, which is a clear influence on their purchasing decision.

Read More: Consumers News and Consumers Current Events
Brightsurf.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.