In my "How to Think Like a Psychologist" course last night, I hosted Stanford neuroeconomist Brian Knutson. His research has illuminated questions like: Why does the brain love a bargain? Why do sexy photos increase risky investing?
The answer to both those questions has to with the brain's reward system, which gets excited by both perceived value (e.g. a deeply discounted designer dress) and mating opportunities, however remote (e.g., a photo of a half-naked hottie). And when the reward system gets activated, the brain starts to selectively focus on acquiring rewards, and ignoring costs (or, in the case of investments, risks).
Knutson and I talked about how marketers use this knowledge to make us more likely to binge-shop, gamble, or otherwise throw good money at bad investments. They fill a clothing store with posters of naked models; they pipe out the smell of freshly baked cookies to whet your appetite for any "reward" on sale; they put eye-catching "30% Off!" signs to trigger the brain's bargain instinct.
In the Q&A session, a student asked, "Is there anything you can to do to influence what's going on in the brain, so that you don't buy something you don't really want or need?"
The answer: yes! And it has to do with another of Knutson's findings. When your brain is deciding whether to buy something, two brain systems influence your choice: the reward system, and the pain system. The pain system registers things like cost, and anticipates future regret. Knutson has found that you can reliably predict whether or not someone will buy something by which system is more activated.
So if you want to curb your shopping habit, especially in the face of stores and marketers trying to amp up your reward system, one smart strategy is to activate the pain system. Voila, balance is restored - and you can make a more strategic choice.
How do you activate the pain system? No, you don't need to punch yourself, or induce any kind of physical pain. Research has shown that the following shopping strategies increase brain activation that restrains the buying impulse:
1. Pay in cash. Handing over paper money makes the "cost" of a purchase more real, and increases the brain's pain response to forking over all that cash. Paying in cash has been shown to reduce impulse purchases and even lead to healthier grocery purchases.
2. Imagine Hitler in that sweater. This idea came about when Knutson described research showing that previous ownership can influence our desire for an object. Marilyn Monroe once sat in that chair? Priceless. Belonged to a Nazi? No thanks. Yes, it's a little ridiculous - but when you find yourself drawn to something you just can't afford, imagine it being used by someone you find contemptible. Make that mental picture vivid - and see if you don't suddenly find your financial self-control.
3. Institute a mandatory delay. Neuroscientists have found that having to wait even ten minutes for a reward dramatically reduces the brain's response to it. If you can walk out of a store, or switch to a different website, for just 10 minutes, you'll see the "value" of that purchase more clearly. While you're waiting, either distract yourself (you might just forget to come back), or imagine the regret you might feel if you overspend.
4. Smell a fish. OK, this one isn't so practical - you can't exactly carry a can of tuna everywhere you go - but I find it fascinating that people are less likely to take financial risks when exposed specifically to the smell of fish. It's the opposite of what stores do to tempt us, releasing delicious smells through "scent marketing."
Silly? Sure. But remembering these strategies, even if you don't use them, can help you remember that your brain isn't exactly thinking clearly when it's in the middle of a shopping adventure. That awareness can give you just enough space and clarity to avoid purchases you'll later regret.
Check out neuroeconomist Brian Knutson's website (lots of study reports).
Kelly McGonigal is a psychologist at Stanford University. Her latest book is The Willpower Instinct: How Self-Control Works, Why It Matters, and What You Can Do to Get More of It.