People’s decisions about how to spend their money can have a huge impact on their own lives and on the planet. Credit card debt, climate change, plastic pollution, dietary choices—all these and more, to some extent, depend on companies’ decisions about what to sell and consumers’ decisions about what to buy.
That’s why some consumer psychologists and researchers in related fields, like marketing and business, are interested in tackling these social issues through the lens of consumerism. Consumer researchers are working to understand how and why consumers make beneficial choices in areas including sustainability, health, and financial well-being. They’re also studying how to convince companies of the value of improving their supply chains or offering customers healthier, more responsible choices.
“Good, responsible scholars are trying to think about not only what is good for individuals but also what is good for society,” said Lynn Kahle, PhD, a consumer psychologist and director of the sports marketing program at Pace University in New York City.
One big challenge facing society is switching over to a more ecologically sustainable way of life. Making sustainable choices can be a tough sell for consumers, said Katherine White, PhD, a consumer psychologist at the Sauder School of Business at the University of British Columbia in Canada. “It’s this really interesting trade-off between some kind of cost to the self in order to do something for others,” White said. (A trade-off not dissimilar to many of the public health interventions enacted during the COVID-19 pandemic.) The potential benefits of individual sustainable behaviors—recycling, choosing reusable goods, installing solar panels, eating less meat—are fuzzy and in the future, White said, and the status quo is largely set up to enable less-sustainable choices. But to tackle problems like climate change and environmental degradation, both systems and individuals will have to change, she said. “It’s probably the most challenging behavior-change question of our time.”
When consumer psychologists first began studying sustainable behavior in the 1970s, their focus was largely on how to identify consumers who were already prone to go green, said Remi Trudel, PhD, an associate professor of marketing at Boston University’s Questrom School of Business. Over time, though, researchers have begun to focus on how to influence more people. “The biggest question is, how do we nudge people into behaving more sustainably?” Trudel said.
In a 2019 review, White and her colleagues organized research on the topic into a framework they call SHIFT (Journal of Marketing, Vol. 83, No. 3, 2019). SHIFT stands for social influence, habit formation, individual self, feelings and cognition, and tangibility—each a key factor in whether a consumer makes green (or not-so-green) choices. Social influence is one of the most powerful tools available, White said. For example, a study in California led by New York University Stern School of Business associate professor of marketing Bryan Bollinger, PhD, found that every installation of solar panels on a home in a given ZIP code increased the likelihood of another install by 0.78 percentage points (Marketing Science, Vol. 31, No. 6, 2012).
Habits refer to everyday behaviors, like getting coffee every morning in a disposable cup rather than bringing one’s own mug, White said. Any way to make the greener choice easier can help break unsustainable habits, she said. Individual self refers to what resonates with any given person. It’s relatively easy to connect with individuals who already care about sustainability, White said. But sometimes advertisers, marketers, and companies need to work a little harder to link a person’s preexisting values to sustainability.
For example, religious and cultural values can play a role in how people approach environmental values, said Elizabeth Minton, PhD, an associate professor of marketing at the University of Wyoming. “Western consumers view what’s important as sustaining the family unit, sustaining the community, and sustaining the loved ones,” Minton said. Framing sustainability—protecting the environment—as a way to protect family and community, then, becomes a way for marketers to encourage demand for sustainable products.
Research into feelings and cognition has found complex patterns. Some research suggests that while negative emotions such as guilt can prompt environmentally friendly actions, guilt should be deployed with care. For example, after the United Kingdom instituted a policy of charging a small sum for disposable plastic grocery bags, mass communications researcher Sidharth Muralidharan, PhD, of Southern Methodist University, conducted an online survey that found that women who reported high guilt over forgetting to carry reusable bags were more likely to carry them more consistently, but men with high levels of guilt weren’t, suggesting women were more susceptible to “green guilt” than men. In a follow-up experiment, Muralidharan and his colleagues exposed consumers to guilt-inducing advertisements based around either saving the environment or saving money by carrying reusable bags. They found that the environment-based ads were less effective at inducing guilt than the savings-based ads (Journal of Advertising Research, Vol. 58, No. 3, 2018). In other words, guilt must be directed toward an effective target—which is not always related to sustainability—to work.
Finally, tangibility in the SHIFT framework refers to the need to link an action to real consequences, given that the outcome of any behavior is uncertain, White said. Focusing on the near-term benefits of sustainability, such as preventing current environmental degradation, can help, according to research led by Audhesh Paswan, PhD, a professor of marketing at the University of North Texas (Journal of Consumer Marketing, Vol. 34, No. 5, 2017).
One big question is how younger generations of consumers will approach sustainable consumption. Gen Z—the colloquial term for anyone born between the late 1990s and around 2010—tends to hold consumer brands to high standards, said Brent Coker, PhD, a lecturer in marketing at the University of Melbourne. They’re savvy to marketing strategies and don’t like empty platitudes, he said, which can lead to anger at brands they perceive as doing social (or environmental) harm. However, social media marketing can lead to impulse purchasing in Gen Z, according to research by marketing lecturer Elmira Djafavora, PhD, of Northumbria University Newcastle (Journal of Retailing and Consumer Services, Vol. 59, 2021), which could feed overconsumption.
Another area where consumers might need to put aside their immediate impulses for long-term benefits is when making health choices. As with sustainability, consumers may well be aware that a choice—such as buying a sugary beverage—isn’t in their ultimate best interest, but still make that choice nonetheless.
“We know that incentives and information don’t always work as well as we would hope them to,” said Leslie John, PhD, who has a doctorate in behavioral decision research and is an associate professor at Harvard Business School. “What I’ve been trying to do is use insights from psychology to make these tools much more effective at actually changing behavior.”
In one study, John and her colleagues explored whether putting warning labels on sugary beverages discourages their purchase. In a real cafeteria setting, the researchers tested three different types of warning labels: One label simply listed the caloric content of the soda. Another read, “Warning: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay.” A third label contained the same text but with accompanying images of an obese abdomen, a person self-injecting insulin, and rotten teeth. The researchers found that only the graphic warnings had a statistically significant impact, reducing the share of sugary beverages purchased from 21.4% to 18.2% (Psychological Science, Vol. 29, No. 8, 2018). At the same time, in a result that could incentivize firms as well as policymakers, the study also showed that the warning labels didn’t reduce drink sales overall, as consumers chose to buy bottled water instead.
“They’re still buying something; they’re just buying something healthier,” John said of the consumers in the study.
Food-labeling research often lands at the intersection of politics and science. Christina Roberto, PhD, the director of the Psychology of Eating and Consumer Health (PEACH) Lab at the University of Pennsylvania’s Perelman School of Medicine, focuses her research on what she calls “strategic science,” which means that she collaborates with policymakers to develop research questions. For example, in 2018, the Philadelphia Department of Public Health approached Roberto for insights on what kind of label they could use to educate consumers about foods high in salt. Roberto and her colleagues tested a variety of label options for the department, including a saltshaker inside a triangle as required on New York City menus, and a traffic light option with red representing high-salt items. The saltshaker performed the worst in tests of consumer understanding of the symbols, while the traffic light was the clearest. Unfortunately, the traffic light was a legal no-go, Roberto said, because the interpretation of which items got the red light could easily be challenged by food companies in court.
The researchers were also able to show in their data that putting text that read “sodium warning” next to the saltshaker symbol significantly boosted consumer understanding of the label. “We basically said, ‘Look, if you have to compromise and you have to use the saltshaker triangle, at least get the words ‘sodium warning’ next to it,’” she said.
That labeling strategy went into effect in September 2019 in Philadelphia restaurant chains with 15 or more locations. Boosting the potential effectiveness of the warning was a win, Roberto said, because if Philadelphia had used New York’s symbol without changes, that symbol likely would have become the standard for any other cities or states planning to institute sodium warning labels. Now, she said, there is an existing label with a stronger evidence base that new cities can choose to adopt in the future.
Consumer psychologists are also tackling big-picture issues in the realm of money management, an area of great interest since many Americans are in precarious financial positions. According to a Congressional Research Service report, unemployment was elevated throughout 2020, peaking at 14.8% in April (Unemployment Rates During the COVID-19 Pandemic: In Brief, 2021). Savings rates rose sharply, however, hitting 33% of people’s disposable incomes that same month as Americans halted their spending. As of February 2021, the savings rate had declined to 13.6% (Bureau of Economic Analysis, 2020).
Researchers tackle consumer spending and saving in multiple ways. One strategy is to study what types of spending make people happiest. On that front, the research is clear: Buying experiences generally makes people happier than buying stuff. Experiential consumption also seems to trigger a greater sense of gratitude than material consumption, and it can even make people more generous to others in lab-based economic games, according to research led by psychologist Jesse Walker, PhD, an assistant professor of marketing at The Ohio State University (Emotion, Vol. 16, No. 8, 2016).
“This is kind of cool because it suggests that these social benefits of experiential consumption don’t just apply to the consumers themselves but to those around them as well,” said Amit Kumar, PhD, a psychologist and assistant professor of marketing at the University of Texas at Austin’s McCombs School of Business, who coauthored that research.
Experiential consumption seems to make people happier because it strengthens social ties, Kumar said. People tend to bond over conversations about their trips to Italy more than they do about that new furniture set they bought at Ikea. That’s an important thing to know when weighing how to spend your hard-earned money, Kumar said.
But there can be a dark side to the glow of experiential purchases. People are more willing to go into debt for experiential purchases than for material purchases, according to research by Eesha Sharma, PhD, an associate professor of business administration at Dartmouth’s Tuck School of Business (Journal of Consumer Research, Vol. 44, No. 5, 2018). This seems to be because experiences are often time-dependent, Sharma said. If you decide to delay the purchase of a dining room table from July until December, it doesn’t feel like you’ve missed out on owning the table. If you delay your summer beach trip from July until December? Well, then you’ve missed summer vacation altogether.
In general, consumers tend to maintain positive illusions about their own money management, said Emily Garbinsky, PhD, a psychologist and assistant professor of marketing at the University of Notre Dame. Garbinsky is researching ways to “gently shatter” these illusions at the point at which people make savings decisions, perhaps during the use of banking apps. There is evidence from other research that software nudges can boost real-world savings. For example, a field experiment using TurboTax’s free edition led by Duke University professor of psychology and behavioral economics Dan Ariely, PhD, nudged low- and middle-income tax filers to save a portion of their tax refunds. Compared with a control group that received no messaging, the taxpayers who were presented a message about the importance of emergency savings and given choices of ways to save their refund increased deposits to their savings accounts by 50% (Behavioral Science & Policy, Vol. 3, No. 2, 2017).
Garbinsky’s work also zeroes in on how emotions affect money management decisions. She and her colleagues have found, for example, that couples who share bank accounts are more likely to make utilitarian purchases than hedonic ones, in contrast with couples who keep separate bank accounts (Journal of Consumer Psychology, Vol. 29, No. 3, 2019). These results held in both lab and field experiments, as well as in analyses of real banking transactions. Other research under review suggests that couples who pool finances may have more relationship satisfaction, though the findings are correlational.
Often, consumer researchers study single decisions, such as how much money people save or how much debt they’re willing to take on—but money decisions don’t occur in a vacuum, Sharma said. If you’re borrowing money to save more for retirement, for example, it might look beneficial from a savings perspective but disastrous from a debt perspective.
“It’s really important for future research to look at multiple financial decisions together,” she said. “Research that integrates multiple financial decisions, looks at trade-offs, looks at decisions over time, will lead to a more nuanced and better understanding of these choices.”
