Economic and Psychological Determinants of Consumer Behavior

Consumer behavior was first and predominantly studied by economists who relied heavily on rational decision making and consistent utility maximization. However, the strong postulates of rationality were questioned early on by psychologists, sociologists, and anthropologists who started to investigate the field from the perspective of actual human behavior and saw decision making as determined by emotions and limitations of human information processing. Behavioral economists and economic psychologists convincingly argue that economic decisions in general and consumer decisions in particular rarely follow the normative rational choice model. Decisions are affected by feelings and sentiments, motives, attitudes, the subjective construction of meaning, biases, and heuristics in information processing, social symbols, and social influence from family and peer groups (e.g., Gärling, Kirchler, Lewis, & Van Raaij, 2010; Traut-Mattausch, Frey, & Peus, 2008).

Consumer behavior is receiving much attention in economic psychology. It is one of the most prominent fields of research, development, and application of economic decision theories (Kirchler & Hoelzl, 2006). While increasingly more economists are becoming aware of the relevance of the psychological perspective in advancing understanding of economic phenomena, psychologists often perceive research on consumer behavior and economic decisions as an applied field such as health and clinical psychology, educational psychology, work and organizational psychology, traffic and environmental psychology, or criminal and forensic psychology. We received numerous responses to our call for papers for the present special issue, and from these we chose scholars in the fields of consumer behavior and economic decisions research to report their findings. The goal was to demonstrate to the readers of the Zeitschrift für Psychologie / Journal of Psychology how relevant psychological thinking is in understanding consumer behavior, and how fruitful it can be to learn from economic theorizing to advance psychological research.

Most of the topics in consumer behavior involve economic decisions. These are decisions about the use of scarce resources, such as money, time, or effort (van Raaij, 1981). While economic decisions encompass various types of resources, decisions concerning money are termed financial decisions. Financial decisions have significant effects on the economy, given that private households have a major part of a nation’s financial resources at their disposal (Burgoyne & Kirchler, 2008). Financial decisions in households concern general money management, for example, budgeting the available money or paying outstanding bills, and specific areas like expenditures, savings, credit use, and investment in the stock market (Kirchler, Rodler, Hölzl, & Meier, 2001). A classic taxonomy (Ferber, 1973) distinguished between four areas: (a) money management, (b) savings, (c) capital and investment management, and (d) expenditures. While a large amount of research has focused on individual and household buying decisions and expenditures, psychological research has only recently expanded into other areas. Examples can be found in reviews on saving (e.g., Wärneryd, 1999), credit use (e.g., Kamleitner & Kirchler, 2007), stock market investments (e.g., Wärneryd, 2001), and taxpaying (e.g., Kirchler, 2007). Special issues dedicated to specific topics (e.g., poverty; Anand & Lea, 2011) provide an overview of the current research in economic decision making.

Studies on buying decisions refer to impulse purchases, habitual purchases, and “genuine” purchasing decisions made either individually or jointly with household members. The decision type – spontaneous, habitual, autonomous, or joint – is influenced by characteristics of the products, their symbolic meaning, social visibility, the amount of money involved, the availability of cognitive scripts, and whether other persons in the household are affected by the purchased items (Kirchler et al., 2001).

This special issue contains seven empirical papers on consumer behavior and economic decisions. All contributions demonstrate the wide range of perspectives and theoretical frameworks that can be brought to this applied field of research, and they provide future directions for theory development and practical applications, such as marketing, consumer counseling, or policy. Selected topics are the accuracy of consumer perception of prices and price increases, the perception and acceptance of foreign products, imagery processes and spending, emotions and purchase decisions, financial satisfaction and saving behavior, and financial management in the private household.

The first contribution by Gerrit Antonides (2011) provides an overview of money management in the private household from an interdisciplinary perspective. The author examines how this is influenced by socioeconomic factors. As money management is part of household labor, standard economic models would predict that the partner with higher opportunity costs should spend less time on it. Bargaining models, in contrast, would predict that the partner with more resources also has more influence on money management. The author explores data from a large household survey containing socioeconomic variables such as income, education, and family situation as well as psychological variables such as money management, investment decisions, and paying bills. Results indicate that financial management is better explained through bargaining models than the standard economic model – not only income, but also additional resources like knowledge, experience, and available time are important. The author concludes that these aspects need to be considered for policy measures aimed at the financial capability of consumers.

Christandl and Gärling (2011) examine the degree to which consumers are able to forecast price changes over time. In particular, the authors focus on price changes that occur due to inflation. Previous research has shown that consumers often have difficulties with knowledge and understanding of prices and inflation (e.g., Ranyard, Del Missier, Bonini, Duxbury, & Summers, 2008). The current four studies examine how consumers fare with the task of extrapolating future product prices from available information on previous prices. Normatively, extrapolation in this case should follow an exponential logic, not a linear one. The results, however, suggest that consumers use a linear extrapolation by default, leading to biased forecasts of future prices. Forecasts were more accurate when consumers were given information about two price increases instead of one, or the price increases of two products. Forecasts were less accurate when the time intervals between price increases varied or where price decreases were concerned. The authors conclude that consumers may often underestimate future price increases due to inflation.

Muehlbacher, Kirchler, and Kunz (2011) examine the effects of price changes due to promotional activity. Following Thaler’s (1985) concept of transaction utility, consumers consider not only what they get for their money, but also whether a purchase is a “good deal.” The authors focus on situations in which consumers find that they can obtain a product for a reduced price, or that they missed such an opportunity. In two studies, the relevance of transaction utility was confirmed. Results suggest an asymmetric effect, that is, negative transaction utility is more influential than positive transaction utility. The authors conclude that marketing should consider the effects that missing a promotional offer could have on consumers.

Sullivan, Jonas, and Jodlbauer (2011) examine how consumer decisions about foreign and local products are related to threats to and support of their worldview. According to terror management theory, making the finiteness of one’s life salient results in an increased desire to protect one’s worldview (e.g., Greenberg et al., 1990). One protective measure is turning to cultural symbols from one’s group or home country, favoring local products. If, however, one’s worldview is affirmed in other ways, such buffering may not be necessary. In the current study, the authors focus on consumers’ preferences for foreign versus local products. Results suggest that when mortality salience is followed by a worldview affirmation, consumers are even more open to foreign products and willing to pay a higher price. The authors conclude that mortality salience not always leads to a defensive restriction to local products, but that this effect may be reversed.

Kamleitner (2011) examines how mental representations of products can influence consumer decisions. Previous research suggests mental imagery, such as coming up with a vivid picture, can be an effective marketing strategy to induce favorable consumer reactions (e.g., Schlosser, 2003). However, the specific contents of imagery are less thoroughly researched. The author suggests that “ownership” is a particularly relevant content of imagery and an important mediator of the effect of imagery on consumer decisions. Results from two studies suggest that product imagery spontaneously leads to a simulation of ownership, and this mediates the effect of imagery on attitudes toward the product. The author concludes that ownership simulations – imagining what it is like to own the product – can be a key determinant of consumer decisions.

Pollai, Hoelzl, Hahn, and Hahn (2011) examine how anticipated emotions are related to consumer decisions. Previous research suggests that consumers use anticipated emotions to guide their decisions (e.g., Wiener et al., 2007); however, in some situations consumers may choose to neglect anticipated emotions (e.g., Hsee, Zhang, Yu, & Xi, 2003). The authors explore two potential moderator variables – product type and belief in adaptation. Results from two studies confirm that anticipated emotions are related to intentions to buy or to take out a loan for a product. The correlation was of equal strength for hedonic and utilitarian products, but weaker when a belief in adaptation was made salient. The authors conclude that marketing and consumer counseling should closely consider the role of anticipated emotions in consumer behavior.

Traut‐Mattausch and Jonas (2011) examine how financial satisfaction is related to saving. Based on considerations on how satisfaction with their financial situation influences consumer decisions about spending and saving (e.g., Hoch & Loewenstein, 1991), the authors suggest that the link between satisfaction and saving is moderated by the level of income, and that saving attitudes have a mediating role. Results confirm these assumptions. Saving behavior and saving attitudes showed a stronger correlation with financial satisfaction for low-income participants. The authors conclude that the interaction between economic and psychological variables should receive more attention in order to better understand consumers’ economic decisions.

The quality of the papers and relevance of the topics are impressive. We thank the authors for their effort to make substantial contributions and the reviewers who are always committed to ensuring that the standards in economic psychological research are high: Eduard Brandstätter, Fabian Christandl, Georg Felser, Peter Fischer, Tobias Greitemeyer, Eric Igou, Martin Kocher, Stephen Lea, Leonard Lee, Boris Maciejovsky, Harold Miesen, Ellen Nyhus, Thomas Oberlechner, Julia Pitters, Anu Raijas, Rob Ranyard, Tadeusz Tyszka, Mark Wooden, and Tomasz Zaleskiewicz.

We are confident that the selection of articles in this special issue gives the readers of the Zeitschrift für Psychologie / Journal of Psychology a taste of the field of consumer behavior. The contributions presented here can, of course, only provide a few pinpoints of a prospering interdisciplinary topic of research and application, but we hope that they will inspire connections to all fields of psychology and future research.