#2 - Can tightwads spend more AND feel better?

The research provides a new perspective on spending and saving money. Whereas traditional economic theory assumes that the propensity to spend or save is largely determined by the degree to which one cares about the future, this research suggests that spending and saving are driven, at least in part, by more immediate emotional concerns.
— Journal of Marketing Research, Scott Rick

Tightwads outnumber spendthrifts by a 3 to 2 ratio. They save, not because they care more about the future, but because forking out the money is too painful of an emotional experience.

Anticipating the psychological pain that goes along with paying money drives some people to spend less than they would like, while not experiencing enough pain causes others to spend more. 

Tightwads and spendthrifts spend about the same amount of money on gifts. Spendthrifts spend significantly more on coffee, clothes and entertainment. When paying for restaurants and hobbies, spending trends level out again.

SO WHAT?

How a spending decision is framed has a big impact on how much tightwads and spendthrifts are willing to pay. If a purchase is framed as an investment in a relationship, for example, tightwads might agree to spend more.

Dennis Pal

Ipal.Guru, 35 Brian Peck Crescent, Toronto, ON, M4G 4J7