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Inflation is pushing up prices everywhere, from grocery store shelves to gas pumps.
It turns out that it’s also likely taking something away – that mood boost you may enjoy from so-called retail therapy.
Research from Duke University’s Fuqua School of Business finds that buyer’s remorse is more common when people are feeling financial stress.
“Many of us have this feeling like maybe my dollar isn’t going as far as it used to be,” said Gavan Fitzsimons, a professor of marketing and psychology at Duke’s Fuqua School of Business, during a LinkedIn Live session on research he co-authored with Rodrigo Dias and Eesha Sharma.
The research team set out to find out what happens if you feel your financial resources are limited and you buy something — a new TV, for example — for your family.
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Are you happier that you can enjoy the TV? Or are you less happy because you’re more financially stressed?
“What we find is, to the degree you’re feeling more financially constrained and make a purchase, you’re actually less happy with that purchase than you would have been if you weren’t feeling financially constrained,” Fitzsimons said.
That goes whether you’re high- or low-income, the research, which included more than 25,000 consumers, found.
The results showed those sentiments carried over to online reviews written by customers. Consumers who lived in ZIP codes that were financially strained, based on Census data, were more likely to leave negative reviews when they visited major restaurant chains, according to the research.
One reason for the discontent is that financial stress makes people more likely to think of the ways in which they could have otherwise spent their money. So if you buy a new blender for your kitchen, you may later wonder if you should have instead bought a toaster oven, for example.
“That opportunity cost, the thing I could have done with the money, weighs on me,” Fitzsimons said. “Because that weighs on me, I end up with this reduced happiness.”
So how can consumers feel better about their purchases?
“One thing we know for sure is we can plan,” Fitzsimons said.
By thinking through your consumption, you can make sure the purchase is a good one, and a justified use of the money, he said.
Other research suggests there may be yet another key to happiness — increasing the amount of cash you have on hand.
A field study of almost 600 U.K. bank customers found people with higher liquid wealth had more positive views of their financial well-being and, in turn, greater life satisfaction.
Generally, the aggregate amount of cash you have does not matter. Instead, the larger amount of your assets that you hold in cash, the happier you are, said Gary Zimmerman, CEO of MaxMyInterest, a company that aims to help investors access higher interest rates on their cash.
“It’s because of this psychological cushion in your mind,” Zimmerman said. “Knowing if all else goes to zero, at least I can pay my rent, my mortgage or my kid’s education, whatever the things are that are most important to you.”