Pain of Paying

The other day I was on my way to the supermarket to buy food I stopped at a clothes shop, I could not resist to just “have a look”…of course I filled my trolley with lots of on sale things jeans, pulls, bag, shoes etc….I started queueing and when it was my turn to pay the 79£ ( that I was planning to pay by credit card)the cashier said to me: “I only accept cash, the machine is not working at the moment” (luckily) I had enough cash on me. I took the banknotes out of my wallet and as I was counting 10£, 20£, 50£…something happened..I was actually feeling a sort of pain, I was realizing the actual transaction of my money going out of my pocket to someone else. This strange sensation made me rethink about what I was about to buy ( do I really need those things?) so I started to leave behind some of the stuff I was going to buy and finally paid 32£.

I began to wonder why I was willing to pay 79£ on my credit card without thinking twice but when paying by cash (which meant no difference at all, but the physical act of giving something) made think that it was quite a lot of money for things that I didn’t really need.

So, was my consumer behaviour affected by the method of payment I used? I began to search for reasons underneath this behaviour and I came across to the Pain of paying (not having a psychology background it was quite a discovery from me).

The Pain of paying is basically the pain you feel when physically anticipates having to pay for something and you become more conscious about prices (how much you pay).

 

 

On the Monopoly Money: The Effect of Payment Coupling and Form on Spending Behaviour on Journal of Experimental Psychology: Applied Copyright 2008 by the American Psychological Association 2008, Vol. 14, No. 3, 213–225 argued that the Pain of paying was affected by timing and the method of paying by cash,, credit card, gift certificate etc..

I agree with the following quote:”Credit cards effectively anaesthetize the pain of paying,” said George Loewenstein, (Carnegie Mellon) when using cards the pain of paying is reduced compare to cash payments.

So, here is my resolution for next week leave my credit card at home and only use cash (setting a reasonable budget)…to be continued.

 

Sources:

http://www.cmu.edu/homepage/practical/2007/winter/spending-til-it-hurts.shtml

http://www.theguardian.com/lifeandstyle/2012/jun/01/cash-versus-credit-save-money

http://danariely.com/tag/psychology-of-money/

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5 thoughts on “Pain of Paying

  1. Hi!!!!
    As I read, you’re a pathological consumer just like me!

    When I was reading your post I was thinking: “OMG, It’s me!!!!”.
    Every time I have to pay with cash I fell so frustrated!!!! Not only when I’m buying something very useless, such as a fancy dress or a new IPhone cover, but also when I’m buying my groceries at the supermarket, for instance, or a school book.

    Reading this article : http://thetartan.org/2007/1/29/pillbox/shopping I found out that while someone is buying something the two brain areas of pain and pleasure are both active.
    Thanks to fMRI, the researchers found out that there are two main areas that are active during a purchasing decision: the insular complex and the nuclueus accumbens.
    The first one is related with pain and other basic emotions such as anger and it starts to operate when the consumer see the price of the product.
    The nuclueus accumbens, on the other hand, is related with the regulation of emotion and, in the case of consumer’s attitude, it is connected with people’s preferences towards two or more products.
    This two area are always active during our shopping session.
    It means that, when we decide to buy something, we are not leaded only by ore past experiences or by rational thinking; instead, we are influenced by the fight between our actual pleasure of consuming and the prompt pain to spend money.

    The same articles give us a solution… Now that we know the physiological reaction during a purchasing decision, Drug companies could design a pill for “chronic overspenders”.
    It would be perfect for us… and our wallets.

  2. Hi!!!!
    As I read, you’re a pathological consumer just like me!

    When I was reading your post I was thinking: “OMG, It’s me!!!!”.
    Every time I have to pay with cash I fell so frustrated!!!! Not only when I’m buying something very useless, such as a fancy dress or a new IPhone cover, but also when I’m buying my groceries at the supermarket, for instance, or a school book.

    Reading this article : http://thetartan.org/2007/1/29/pillbox/shopping I found out that while someone is buying something the two brain areas of pain and pleasure are both active.
    Thanks to fMRI the researchers found out that there are two main areas that are active during a purchasing decision: the insular complex and the nuclueus accumbens. The first one is related with pain and other basic emotion like anger and it starts to operate when the consumer see the price of the product.
    The nuclueus accumbens, on the other hand, is related with the regulation of emotion and in the case of consumer’s attitude it is connected with people’s preferences towards two or more products.
    It means that, when we decide to buy something, we are not leaded only by ore past experiences or by rational thinking; instead, we are influenced by the fight between our actual pleasure of consuming and the prompt pain to spend money.

    The same articles give us a solution… Now that we know the physiological reaction during a purchasing decision, Drug companies could design a pill for “chronic overspenders”.
    It would be perfect for us… and our wallets.

  3. I agree the blog really made me think of my own spending behaviours and on reflection I realised that my spending is more reckless when I use my card rather than cash. When I first thought about this Milgram’s shock study came in mind, particularly when the participant were in a separate room from the confederate. The buffering effect of not seeing the victims suffering reduced the participant’s rational thinking ability thus increasing likelihood of conformity (Milgram, 1964).

    I was thinking if the buffering effect of using credit cards could have a similar effect on reducing the consumer’s rational thinking ability? Upon my investigation I came across some research that suggests that this could be the case. Thomas, et al (2011) found that consumers were more likely to make unhealthy food purchases when using a credit card. They explain that the increased purchase of the unhealthy foods was due to the fact that buffering effect of the unphysical transaction of using credit cards that made consumers more likely to make more impulsive purchase decisions. This is supported by the dual process model of decision making, as we are more likely to use are “hot” impulsive system to satisfy are immediate needs if the process of paying is quick and painless (Metcalfe, & Mischel, 1999).

  4. Hi! It is funny that I wrote a blog of the same topic(http://abp3ea.wordpress.com/). I have read some papers from Gourville and Soman (2002). They relate this case to consumption. It provides a guideline of understanding the feeling of consumers when they deciding to purchase a product and how it will influence the process of the transaction and consumption. A lot of tricks that be used by the sellers was presented in that paper. It is quite useful for me to save my money.

    As a foreigner, it is difficult to accept the notes and coins of the UK. As a result, I use credit cards a lot. I found that it is impossible to control my spending through credit cards. I do not even know how much I spend. A pill for “chronic overspenders”? I do need them, please take my money and give me the pills.

  5. Hi,
    Is really interesting to find out that using credit card payment results lesser pain on spending money compare to cash payment.

    I used shop online a lot during summer break. It is just too convenient for me by consumer something by clicking it. And I never felt that any feeling buying it. However, I used to feel it is expensive to have a lunch at cafeteria when cash payment method was made. This is why always self-cooking rather than having an expensive lunch at cafeteria. Now I do understand why.

    Such information can be very useful to marketer. One reason is marketer could stimuli the increase used of online payment rather than cash payment in order to decrease the pain associated in it. When consumer feels less pain whenever they bought something, eventually next order will repeat.

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