Are You a Conflicted Consumer?
Tightwads, spendthrifts and the pain of paying
Posted November 6, 2018
A quick self-assessment
Let’s skip the usual introductory text and start with a short self-assessment. Please complete the three questions below and take note of the score associated with your answers.
1. Please read the following scenario about the behavior of two shoppers and answer the question below.
Mr. A is accompanying a good friend who is on a shopping spree at a local mall. When they enter a large department store, Mr. A sees that the store has a “one-day-only-sale” where everything is priced 10-60% off. He realizes he doesn’t need anything, yet can’t resist and ends up spending almost $ on stuff.
Mr. B is accompanying a good friend, who is on a shopping spree at a local mall. When they enter a large department store, Mr. B Sees that the store has a “one-day-only-sale” where everything is priced 10-60% off. He figures he can get great deals on many items that he needs, yet the thought of spending the money keeps him from buying the stuff.
In terms of your own behavior, who are you more similar to, Mr. A or Mr. B? Pick a number on the scale.
5 – Mr A
3 – About the same or neither
1 – Mr. B
2. Some people have trouble limiting their spending: they often spend money—for example on clothes, meals, vacations, phone calls—when they would do better not to.
Other people have trouble spending money. Perhaps because spending money makes them anxious, they often don’t’ spend money on things they should spend it on.
a. How well does the first description fit you? That is, do you have trouble limiting your spending?
1 – Never
2 – Rarely
3 – Sometimes
4 – Often
5 – Always
b. How well does the second description fit you? That is, do you have trouble spending money?
5 – Never
4 – Rarely
3 – Sometimes
2 – Often
1 – Always
3. Which of the following descriptions fits you better?
1 – Tightwad (difficulty spending money)
6 – About the same or neither
11 – Spendthrift (difficulty controlling spending)
Once you’ve finished, sum up all your answers. You should now have a number between 4 and 26. If your total score is between 4 and 11, you’re classified as a tightwad. If it’s between 19 and 26, you’re a spendthrift. Finally, if your score sums to a number between 12 and 18, congratulations – you’re an “unconflicted” consumer.
What does this mean?
According to a recent review by Scott Rick, who created the tightwad-spendthrift (TW-ST) scale, your results indicate how intensely you experience the pain of paying – the unpleasant feeling you may get from spending money. The pain of paying is a self-regulatory mechanism, as it can help deter overspending. Tightwads experience the pain of paying more intensely. They may encounter instances in which they think they should buy something, but distress prevents them from acting on that belief. The opposite is the case for spendthrifts, who experience less pain of paying and may end up spending more than they would ideally like to spend. While tightwads and spendthrifts are conflicted in different ways, neither are happy with how they handle money.
Being a tightwad is not exactly the same as being frugal. Rick maintains that frugality is more about a “pleasure of saving,” whereas tightwaddism is more closely tied to a pain of paying.
Why does it matter?
Since tightwads and spendthrifts experience the pain associated with spending money differently, they also react differently to certain marketing manipulations.
Research suggests that tightwads are more tempted to spend money when exposed to marketing messages that reduce their pain of paying. In one study, tightwads were more likely to pay a fee associated with an online purchase when it was framed as “a small $5 fee” than when it was framed as “a $5 fee”. Spendthrifts, who are more likely to spend money in the first place, were completely insensitive to this framing. Similar results were found in an experiment that framed a massage as either pleasurable (higher pain of paying) or healthy (lower pain of paying). Consistent with these findings, a subsequent study on “vice” product purchases (e.g. cookies or soda) found that tightwad/spendthrift differences in spending were smaller when research participants paid with credit (lower pain of paying) than when they used cash (higher pain of paying).
Does this mean that spendthrifts are immune to framing and purchase contexts? Not necessarily. Research on ‘opportunity cost neglect’ suggests that increasing the pain of paying can reduce the likelihood that spendthrifts will make an expensive purchase. Their experiment asked individuals to choose between a good $700 stereo and a better $1000 stereo. When selecting the cheaper stereo was framed as “leaving you $300 in cash”, spendthrifts were significantly less likely to choose the more expensive stereo. No such difference was found among tightwads. Naturally, it would not be in marketers’ interest to highlight opportunity costs (and increase the pain of paying) associated with making a more expensive purchase.
At the end of the day, we are left with a simple conclusion for conflicted consumers: If you are a spendthrift, you may want to examine your general attitude towards spending. Taking into account opportunity costs (saving money or spending it more wisely) will be a good start. If you are a tightwad, there is no aspirin to ease your pain of paying. If you'd like to reduce your conflict, live a little. If not, beware of your susceptibility to clever marketing that tries to make you feel better about spending money.