In These Uncertain Times: Fake News Amplifies the Desires to Save and Spend in Response to COVID-19
Justin Pomerance, Nicholas Light and Lawrence E. Williams
Journal of the Association for Consumer Research (forthcoming)
N O N T E C H N I C A L S U M M A R Y
Globally, COVID-19 has shut down economies and claimed hundreds of thousands of lives. It has changed how we shop and what we buy. Unfortunately, it arrived on the heels of another crisis: the threat of fake news. This research examines how the ‘double-whammy’ of COVID-19 and fake news influences people’s desires to spend and save. It finds that COVID-19 creates uncertainty—and that fake news makes that uncertainty even worse. This uncertainty increases two seemingly contradictory desires: a goal to save money, and a desire to spend money on things that make us feel better. This pattern is particularly strong among relatively wealthy consumers. These findings matter for businesses, policymakers, and consumers themselves. Despite widespread economic contraction, it is important for businesses to recognize that people continue to open their wallets for specific purchases. Companies can capitalize on this either by emphasizing how they can help consumers save money, or by showing how their brand might provide some stress relief. Policymakers can look for ways to discourage low-income consumers from overspending when they feel the stress and uncertainty caused by the dual threats of the pandemic and fake news, but they can also nudge high-income consumers to channel their increased spending to stimulate the economy. And finally, consumers should be aware of how these conflicting desires to save more and spend more result from feeling uncertain. Doing so could help them be more responsible spenders, saving when they can but indulging in a little retail therapy when they must.
A B S T R A C T
COVID-19 is changing human history. However, it arrived on the heels of another crisis—fake news. We examine how fake news influences consumers’ spending intentions in response to COVID-19. Across three studies we find that concerns about COVID-19 engender uncertainty, and that exposure to fake news amplifies this effect. This uncertainty increases consumers’ tendency towards two competing goals: compensatory consumption and resource conservation. We present three studies in which we measure consumers’ general preferences (study 1), their specific preferences with respect to buying food at a restaurant (study 2), and their choices when selecting from a meal delivery service (study 3). Our findings have important implications for both marketing practitioners and policy makers, which we discuss throughout.
Data available on OSF
Globally, COVID-19 has shut down economies and claimed hundreds of thousands of lives. It has changed how we shop and what we buy. Unfortunately, it arrived on the heels of another crisis: the threat of fake news. This research examines how the ‘double-whammy’ of COVID-19 and fake news influences people’s desires to spend and save. It finds that COVID-19 creates uncertainty—and that fake news makes that uncertainty even worse. This uncertainty increases two seemingly contradictory desires: a goal to save money, and a desire to spend money on things that make us feel better. This pattern is particularly strong among relatively wealthy consumers. These findings matter for businesses, policymakers, and consumers themselves. Despite widespread economic contraction, it is important for businesses to recognize that people continue to open their wallets for specific purchases. Companies can capitalize on this either by emphasizing how they can help consumers save money, or by showing how their brand might provide some stress relief. Policymakers can look for ways to discourage low-income consumers from overspending when they feel the stress and uncertainty caused by the dual threats of the pandemic and fake news, but they can also nudge high-income consumers to channel their increased spending to stimulate the economy. And finally, consumers should be aware of how these conflicting desires to save more and spend more result from feeling uncertain. Doing so could help them be more responsible spenders, saving when they can but indulging in a little retail therapy when they must.
A B S T R A C T
COVID-19 is changing human history. However, it arrived on the heels of another crisis—fake news. We examine how fake news influences consumers’ spending intentions in response to COVID-19. Across three studies we find that concerns about COVID-19 engender uncertainty, and that exposure to fake news amplifies this effect. This uncertainty increases consumers’ tendency towards two competing goals: compensatory consumption and resource conservation. We present three studies in which we measure consumers’ general preferences (study 1), their specific preferences with respect to buying food at a restaurant (study 2), and their choices when selecting from a meal delivery service (study 3). Our findings have important implications for both marketing practitioners and policy makers, which we discuss throughout.
Data available on OSF
Two Essays Toward a Conceptual Framework for the Pain of Paying
Justin Pomerance
Doctoral Dissertation (2020)
A B S T R A C T
Nearly all consumption requires payment, and it is well documented that people find spending their money to be affectively aversive. However, our understanding of why spending is aversive remains incomplete. While it seems that the economic consequences of a payment should be the main driver of how people feel about it, a growing body of evidence demonstrates that this is not the case. A tremendous amount of psychological research describes the major determinants of negative affect, yet to date this literature has remained largely disconnected from the marketing literature on pain of paying. As such, the main goal of this dissertation is use existing research on affect and emotions to uncover new knowledge about the psychological underpinnings of the pain of paying. In essay 1, I note that the existing characterization of the pain of paying as a self-regulatory device implies that the pain of paying moves people toward some goal; however, the nature of this goal has thus been left unspecified. I argue that one important goal contributing to the pain of paying is the goal to maintain financial slack (a perceived surplus of spare financial resources); I present evidence that this goal is an important determinant of the pain of paying, that different stores of wealth contribute differently to this goal and so are differentially painful to deplete, and that this framework has important implications for our current understanding of the pain of paying. In essay 2, I investigate the influence of perceived control on the pain of paying. I argue that perceiving a lack of control heightens the pain of paying, decreasing spending overall. While this conceptualization is consistent with macroeconomic patterns in which uncertainty dampens spending, it stands in contrast research demonstrating that when people perceive a lack of control over their lives, they compensate by spending additional money in an effort to restore perceptions of control.
Nearly all consumption requires payment, and it is well documented that people find spending their money to be affectively aversive. However, our understanding of why spending is aversive remains incomplete. While it seems that the economic consequences of a payment should be the main driver of how people feel about it, a growing body of evidence demonstrates that this is not the case. A tremendous amount of psychological research describes the major determinants of negative affect, yet to date this literature has remained largely disconnected from the marketing literature on pain of paying. As such, the main goal of this dissertation is use existing research on affect and emotions to uncover new knowledge about the psychological underpinnings of the pain of paying. In essay 1, I note that the existing characterization of the pain of paying as a self-regulatory device implies that the pain of paying moves people toward some goal; however, the nature of this goal has thus been left unspecified. I argue that one important goal contributing to the pain of paying is the goal to maintain financial slack (a perceived surplus of spare financial resources); I present evidence that this goal is an important determinant of the pain of paying, that different stores of wealth contribute differently to this goal and so are differentially painful to deplete, and that this framework has important implications for our current understanding of the pain of paying. In essay 2, I investigate the influence of perceived control on the pain of paying. I argue that perceiving a lack of control heightens the pain of paying, decreasing spending overall. While this conceptualization is consistent with macroeconomic patterns in which uncertainty dampens spending, it stands in contrast research demonstrating that when people perceive a lack of control over their lives, they compensate by spending additional money in an effort to restore perceptions of control.
| Pomerance_Dissertation.pdf |
