正文
Money & Happiness
by Laura Rowley
The Psychology of Buyer’s Remorse
Friday, November 10, 2006
Last week, my hometown celebrated what I consider to be the scariest day of the year. No, not Halloween -- annual bulk pick-up day.
Once a year, the town allows residents to throw anything on the curb to be hauled away. It's a mind-boggling array of merchandise -- computer components, exercise and sporting equipment, bicycles, toys, books, baby strollers, furniture, appliances, mattresses, patio furniture. Much of the loot is in respectable to excellent condition.
The goods can't be put to the curb before 7 p.m. After that, the town becomes a gigantic free yard sale, attracting hoards of garbage-pickers. Motorists glide at a snail's pace through the darkened, leaf-strewn streets, stopping abruptly to stash a tricycle in the trunk, or secure a dresser to the roof.
Future Imperfect
Bulk pick-up day is a frightful reminder of how easy it is to squander money on stuff that is literally worthless in no time at all. What makes people buy things today that become junk on the curb a year later?
I posed that question to George Loewenstein, a Carnegie Mellon professor of economics and psychology, and co-author of Time and Decision: Economic and Psychological Perspectives on Intertemporal Choice.
One problem is "projection bias," in which people project their current preferences onto their future selves. "If you look at stuff people throw out, a lot of it tends to be virtuous things -- exercise machines that don't get used, bicycles people meant to ride to work, or books people haven't read," Loewenstein says.
"People are incredibly optimistic when it comes to their future selves. It's a worthy goal to try to be more virtuous, but don't make (financial) decisions that assume you're going to be more virtuous in the future than you are in the present."
Purchasing an Identity
Also to blame for the detritus on the curb is something known as "self-signaling," in which a smaller act signifies something larger about our internal state or future prospects. "You buy the exercise machine to signal to yourself that you're a person who exercises; you buy books to signal to yourself that you're an intellectual," says Loewenstein.
"In a perverse example, people who are anxious about their financial situation may end up spending to reassure themselves that they don't have a financial problem," he continues. "Self-signaling can lead people to take symbolic actions, which in some cases have exactly the opposite consequence of explicit goals."
Social influences comprise a third factor, Loewenstein notes. Research on "co-action effects," for instance, has found that eating and drinking behavior is greatly influenced by the actions of others, though few people seem to notice the effect. In one study, men taking part in a beer taste-test drank twice as much on average when paired with a heavy drinker versus a buddy who was not imbibing at all.
Humans seem to be hard-wired to want the same things -- possibly helpful from an evolutionary perspective, but highly depressing when the UPS guy is constantly striding up your neighbor's walk with boxes from Restoration Hardware.
"Social factors turn luxuries into necessities," says Loewenstein. "Our ideas about what we feel we need are very much driven by what people around us have."
The Future Looks Bright (or Not)
Meanwhile, bulk pick-up day is a stark reminder of the intertemporal choices we confront daily. These decisions involve tradeoffs among costs and benefits occurring at different times -- choices that can ultimately result in prosperity or poverty, good health or illness, happiness or misery.
Do you skip a cigarette today for the reward of longer life down the road? Do you enjoy the Caribbean cruise now or set aside the $2,500 it would cost for a retirement that is 25 years away?
Why and how we make these tradeoffs has preoccupied economists for more than 150 years. In the mid-1800s, for example, English economist William Stanley Jevons suggested that people will defer immediate gratification only when it is outweighed by the utility they get from anticipating future consumption.
Whether you spend today or invest for tomorrow will depend greatly on your ability to imagine the future in a meaningful way. In short, if you don't have specific goals, you won't have enticing mental images, and the money will go to stuff that ends up on the curb.
Fact and Fiction
By contrast, 19th-century Austrian economist Euen von Bohm-Bawerk argued that it's not a dearth of creativity that thwarts us, but lack of knowledge. As he wrote, "[T]he consideration we give our future and, particularly, our far-away future wants, is more or less imperfect. Naturally, then, all those wants which we have not considered remain without influence on the valuation of such goods as are destined to serve those future wants."
In other words, what we don't know might hurt us if we're not prepared financially. Consider the chasm between the expectations of working people and the data on those already retired. More than three-quarters of today's workers expect to do some kind of work for pay after they retire, according to a new survey by the Pew Research Center.
Meanwhile, only 12 percent of those who have already retired actually do work. Clearly, the optimistic majority who plan to stay on the job must be missing some information about the reality of working in your 60s and 70s.
No Pain, No Gain
Economist Nassau William Senior argued that everyone recognizes the value of both present and future utility. It's the folks who can't deal with the miseries of self-denial required to delay gratification who behave in ways that discount future events. "To abstain from the enjoyment which is in our power, or to seek distant rather than immediate results, are among the most painful exertions of human will," Senior wrote in 1850.
Undoubtedly, more enjoyments are in our power today than in Senior's time, thanks to the ubiquitous presence of plastic. Research has found that consumers are willing to spend significantly more -- up to 100 percent more -- when using credit cards rather than cash.
"Credit cards are pernicious," says Loewenstein. "They undermine the basic emotional mechanism that prevents us from overspending -- that is, the pain we derive from forking over the cash and paying for things."
When there's no pain involved in spending today, there's little hope for long-term gain -- and that portends yet another ripe harvest of buyer's remorse piled high on the curb.
by Laura Rowley
The Psychology of Buyer’s Remorse
Friday, November 10, 2006
Last week, my hometown celebrated what I consider to be the scariest day of the year. No, not Halloween -- annual bulk pick-up day.
Once a year, the town allows residents to throw anything on the curb to be hauled away. It's a mind-boggling array of merchandise -- computer components, exercise and sporting equipment, bicycles, toys, books, baby strollers, furniture, appliances, mattresses, patio furniture. Much of the loot is in respectable to excellent condition.
The goods can't be put to the curb before 7 p.m. After that, the town becomes a gigantic free yard sale, attracting hoards of garbage-pickers. Motorists glide at a snail's pace through the darkened, leaf-strewn streets, stopping abruptly to stash a tricycle in the trunk, or secure a dresser to the roof.
Future Imperfect
Bulk pick-up day is a frightful reminder of how easy it is to squander money on stuff that is literally worthless in no time at all. What makes people buy things today that become junk on the curb a year later?
I posed that question to George Loewenstein, a Carnegie Mellon professor of economics and psychology, and co-author of Time and Decision: Economic and Psychological Perspectives on Intertemporal Choice.
One problem is "projection bias," in which people project their current preferences onto their future selves. "If you look at stuff people throw out, a lot of it tends to be virtuous things -- exercise machines that don't get used, bicycles people meant to ride to work, or books people haven't read," Loewenstein says.
"People are incredibly optimistic when it comes to their future selves. It's a worthy goal to try to be more virtuous, but don't make (financial) decisions that assume you're going to be more virtuous in the future than you are in the present."
Purchasing an Identity
Also to blame for the detritus on the curb is something known as "self-signaling," in which a smaller act signifies something larger about our internal state or future prospects. "You buy the exercise machine to signal to yourself that you're a person who exercises; you buy books to signal to yourself that you're an intellectual," says Loewenstein.
"In a perverse example, people who are anxious about their financial situation may end up spending to reassure themselves that they don't have a financial problem," he continues. "Self-signaling can lead people to take symbolic actions, which in some cases have exactly the opposite consequence of explicit goals."
Social influences comprise a third factor, Loewenstein notes. Research on "co-action effects," for instance, has found that eating and drinking behavior is greatly influenced by the actions of others, though few people seem to notice the effect. In one study, men taking part in a beer taste-test drank twice as much on average when paired with a heavy drinker versus a buddy who was not imbibing at all.
Humans seem to be hard-wired to want the same things -- possibly helpful from an evolutionary perspective, but highly depressing when the UPS guy is constantly striding up your neighbor's walk with boxes from Restoration Hardware.
"Social factors turn luxuries into necessities," says Loewenstein. "Our ideas about what we feel we need are very much driven by what people around us have."
The Future Looks Bright (or Not)
Meanwhile, bulk pick-up day is a stark reminder of the intertemporal choices we confront daily. These decisions involve tradeoffs among costs and benefits occurring at different times -- choices that can ultimately result in prosperity or poverty, good health or illness, happiness or misery.
Do you skip a cigarette today for the reward of longer life down the road? Do you enjoy the Caribbean cruise now or set aside the $2,500 it would cost for a retirement that is 25 years away?
Why and how we make these tradeoffs has preoccupied economists for more than 150 years. In the mid-1800s, for example, English economist William Stanley Jevons suggested that people will defer immediate gratification only when it is outweighed by the utility they get from anticipating future consumption.
Whether you spend today or invest for tomorrow will depend greatly on your ability to imagine the future in a meaningful way. In short, if you don't have specific goals, you won't have enticing mental images, and the money will go to stuff that ends up on the curb.
Fact and Fiction
By contrast, 19th-century Austrian economist Euen von Bohm-Bawerk argued that it's not a dearth of creativity that thwarts us, but lack of knowledge. As he wrote, "[T]he consideration we give our future and, particularly, our far-away future wants, is more or less imperfect. Naturally, then, all those wants which we have not considered remain without influence on the valuation of such goods as are destined to serve those future wants."
In other words, what we don't know might hurt us if we're not prepared financially. Consider the chasm between the expectations of working people and the data on those already retired. More than three-quarters of today's workers expect to do some kind of work for pay after they retire, according to a new survey by the Pew Research Center.
Meanwhile, only 12 percent of those who have already retired actually do work. Clearly, the optimistic majority who plan to stay on the job must be missing some information about the reality of working in your 60s and 70s.
No Pain, No Gain
Economist Nassau William Senior argued that everyone recognizes the value of both present and future utility. It's the folks who can't deal with the miseries of self-denial required to delay gratification who behave in ways that discount future events. "To abstain from the enjoyment which is in our power, or to seek distant rather than immediate results, are among the most painful exertions of human will," Senior wrote in 1850.
Undoubtedly, more enjoyments are in our power today than in Senior's time, thanks to the ubiquitous presence of plastic. Research has found that consumers are willing to spend significantly more -- up to 100 percent more -- when using credit cards rather than cash.
"Credit cards are pernicious," says Loewenstein. "They undermine the basic emotional mechanism that prevents us from overspending -- that is, the pain we derive from forking over the cash and paying for things."
When there's no pain involved in spending today, there's little hope for long-term gain -- and that portends yet another ripe harvest of buyer's remorse piled high on the curb.
评论
目前还没有任何评论
登录后才可评论.
