Consumer and economic psychology
Week 1:
Consumer psychology: products < -- > people
‘consumer psychology employs theoretical psychological approaches to understanding consumers’
Focuses e.g. on;
1. Product adoption;
- Competition
- Assisting consumers
- Advertisement
- Attention, memory
- Application (e.g. WW2)
2. Impacts on people;
- James (1890); who you are
- Coca cola
- Fossil advertisement
3. Product use:
- More effective use
- More sustainable use
Economic psychology: economy < -- > people
‘economic psychology promotes and discusses research, as well as policy making, on the interface of
psychology and economics’.
Focusses e.g. on:
1. Decision making;
- (ir)rational
- Value/utility
- Risk/uncertainty
2. How this makes people feel
- Wellbeing
3. How this affects the economy
- Consumer sentiment index
All about the money?
Value/utility?
Demand/supply?
- Values
- Comprehensive wellness
All rational?
- Heuristics
- Biases
Week 2:
Pt.1;
,Today;
Why most consumers desire to act prosocially and ethically;
- Self-interested motives
- Hedonic benefits
And why often we don’t act accordingly
- Need to belong
- Need to ‘feel good about ourselves’
Prosocial behavior: behavior that benefits other people or society as a whole. (helping
others/donating etc.)
Prosocial consumer behavior: refers to purchase behavior involving (financial) self-sacrifice for the
good of others or of society
Examples of prosocial consumer behavior;
- Cause-related marketing
- Charitable giving; giving money to charity
- Consumer activism: blocking a certain brand
- Sustainable purchasing/sustainable consumption behaviors
- Volunteerism/helping behaviors
- Ethical purchasing and consumption; fairtrade etc.
What is in it for the consumer?
Some people think it’s nothing, but that’s not always the case.
Why behave prosocially?; what motivates people to engage in prosocial behavior?
1. Self-interested motives (external)
2. Hedonic benefits (internal)
Sometimes it’s directly beneficial to do so, e.g. the health benefits of eating a vegan diet.
Most of the times the benefits are more indirect;
- Reputation concerns: we strongly care about our reputation, we have to show that we are
nice, reliable persons.
Reputation for cooperation: have to prove others 2 things;
1. Willingness to confer benefits onto others (willingness to contribute your equal part)
2. Ability to confer benefits onto others.
How does prosocial behavior help build this reputation?;
1. Altruistic/cooperative actions; want to show others we are nice, trustable persons (e.g.
helping others or don’t get mad when they make a mistake.)
- Altruistic; being helpful to others without benefitting yourself.
2. Costly signaling; engaging in actions that don’t directly benefit the others, but still show that
you are a good person. (the person that always raise their hands to answer questions, you find
them annoying, but those are the persons you want in your group)
Engaging in visible prosocial behavior (e.g. environmental conversation) enhances one’s reputation
(reputational status) because it signals that a consumer self-sacrificed for a greater good
Costly signaling theory (aka handicap principle); proposes that expensive and often seemingly
arbitrary or wasteful behavioral or morphological signals are designed to convey information
benefiting the signalers.
More prosocial under time pressure, because they didn’t have much time to think about all different
outcomes etc.
Hedonic benefits; warm glow. (warm feeling/feeling good about yourself)
,Warm-glow giving; economic theory describing the emotional reward of giving to others. People
experience a sense of joy that is self-gratifying. That is because people feel that they are doing their
part to help others. This satisfaction of warm glow represents the selfish pleasure derived from ‘doing
good’ regardless of the actual impact of one’s generosity.
- Our brain rewards us for prosocial actions especially when we choose to do good. People are
intrinsically motivated to act prosocially.
Yet, we fail to act accordingly, why?;
Attitude behavior gap in ethical consumption: individuals may not always translate their attitudes or
beliefs into corresponding actions, revealing a discrepancy between what people say and what they do.
if we know the bad worker welfare, why do we keep buying products produced by brands that
make use of these?
2 possible candidate explanations:
1. Need to belong
2. Need to ‘just feel good about ourselves’
1. Need to belong
For some types of prosocial behavior this need to belong can be even more detrimental; e.g. pluralistic
ignorance in the context of climate change.
2. People want to maintain a positive self-concepts and maximize material self-interest.
How can these needs be aligned?;
- Moral disengagement
- Selective attention to information (willful ignorance)
- Do-gooder derogation.
Attitude-behavior gap, Moral disengagement: the moral standards I follow usually don’t apply to this
specific situation.
- the cognitive processes by which individuals justify or rationalize unethical actions, distancing
themselves from the moral consequences of their behavior.
E.g. we normally don’t want to cheat, but we say/think things to make it less worse. ‘Everyone does
this’ etc.
People let themselves ‘off the hook’ via;
- Dehumanization: when you hear about big groups that are hurt you find it less bad than when
you see a picture or hear a story of 1 single person that hurts. (i.e. statistical lives)
- Euphemistic labeling: ‘collateral damage’ mild or positive terms are used to describe actions,
events, or concepts that may have negative or unfavorable implications, aiming to soften the
impact or make them more socially acceptable.
- Diffusion of responsibility; pointing to others, when there are a lot of different people in a
situation where help is needed you expect something else to do something. (still feel good
about yourself without helping.)
Attitude-behavior gap, Willful ignorance: the decision to avoid becoming informed about something,
to avoid having to make painful decisions that such information might prompt. (as long as I keep
myself away from the information I can remain more ignorant.)
- People who care the most about an issue are the least willing to request information about that
issue these people also feel most responsible for this, they get more bad feeling when they
hear more than people who don’t care and don’t feel responsible.
Do-gooder derogation: moral do-gooders elicit downward social comparisons and challenge
observers moral self-concept. Viewing people who do good as ‘overachievers’ or something. (bullying
people that behave pro-socially to make yourself feel better when you don’t)
- Threat triggers defensive processing; discrediting those who do the right thing helps restore
the threatened moral self-concept.
Summary;
, Article 1; ‘prosocial consumer behavior’ ‘Deborah A small and Cynthia Cryder
Prosocial consumer behavior; the purchase behavior involving self-sacrifice for the good of others or
of society.
- Research highlights the types of motivation that induce prosocial behavior; extrinsic rewards,
reputational benefits, pursuit of pleasure, avoidance of distress.
2 topics; 1. How do consumers judge themselves and others. 2. How do consumers respond to
corporate partnerships with charity.
Is there a pure motive of altruism and if not, what else motivates people to sacrifice for strangers
needs. Altruism; the selfless concern for the well-being and happiness of others, prioritizing their
needs and interests over one's own.
Self-interested motives; e.g. donating money, but doing it to post about it online and show
others that you are generous and conspicuous. Or the government stimulating charitable
giving by giving tax benefits. So you do it for the tax benefits
Self-perception; donors believe that their altruistic acts should be purely motivated. So it can
actually have the opposite effect when people want to stimulate you to donate, because self-
interest and altruism are viewed as incompatible.
- so public observation of giving can at times reduce generosity. Consumers feel a need to
demonstrate their own goodness to themselves. They will even give more when donating is
difficult.
Hedonic benefits; consumers derive pleasure from being generous, charitable behavior is
linked with pleasure centers of the brain.
- people want to feel like they have a big influence, so donors give more when they get more
details about what it will accomplish, when they help a larger proportion of the problem and
when it’s doubled by an outside source, because they feel more influential.
Empathy and sympathy; sympathy; people tend to give with their hearts rather than with
their heads.
- Identifiable victim effect; more sympathy (willing to donate more) when you have a specific,
identifiable victim instead of a statistical life. (groups or abstract statistics). best to show if
you want donations.
- The personal experience of knowing a victim of a particular misfortune increases generosity to
victims of the same misfortune. So you are more likely to donate to a charity for e.g. a disease
when you know someone who is a victim of that disease.
Charitable credit; when motives for giving to charity are perceived to be pure people earn chartable
credit, but when impure motives are inferred for the same actions, less credit is earned. (even though
you still give the same amount.)
Summary of the article;
‘consumers are motivated to behave prosocially due to a variety of motives, including extrinsic
rewards, reputational benefits, the pursuit of pleasure and the avoidance of distress.
Article 2; ‘prosocial behavior and reputation; when does doing good lead to looking good?’
]
About how people judge those who act generously.