Spending and Happiness: The Role of Perceived Financial Constraints | CU Experts

Abstract; Perceived financial constraints are ubiquitous, and prior research suggests that consumers who feel financially constrained are especially likely to engage in compensatory consumption to signal positive attributes or offset the aversiveness associated with their state. However, it is unclear whether spending confers greater happiness when consumers feel financially constrained. Seven high-powered studies (N =��7,228) demonstrate that perceived financial constraints decrease the happiness consumers derive from their purchases. This effect is robust across several purchase types and occurs in part because consumers who perceive greater financial constraints are more likely to consider opportunity costs when evaluating their purchases (studies 2A and 2B). Consistent with this mechanism, the effect attenuates when all consumers are prompted to consider opportunity costs (study 3) and when consumers consider planned purchases (study 4). The negative effect of perceived financial constraints on purchase happiness results in an important behavioral outcome: less favorable consumer reviews (studies 5A and 5B). The authors conclude by meta-analyzing their file drawer (25,765 participants; 42 studies) to explore how the effect differs across several purchase types and discussing theoretical and practical implications for consumers and marketers.

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