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SO…I MAKE $1600 A YEAR AND SUDDENLY I OWE $3000 1.

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Presentation on theme: "SO…I MAKE $1600 A YEAR AND SUDDENLY I OWE $3000 1."— Presentation transcript:

1 SO…I MAKE $1600 A YEAR AND SUDDENLY I OWE $3000 1

2 CREDIT CARDS ARE A MAJOR PHENOMENA 1700 million- 70 miles into space 78% of households 6 per family $ ,780 1 trillion outstanding debt 46% have no balance 2

3 ENHANCEMENT OF SPENDING WITH CREDIT CARDS IS PRIMARY CONCERN Work has been descriptive Do credit cards cause spending? 3

4 PEOPLE SPEND MORE WITH CREDIT CARDS How are we to understand this relationship? No special aspect Rational Debt socially acceptable 4

5 And then…. 5 Social psychology….Berkowitz

6 Mode of payment may exert influence on consumer behavior 6

7 Classical Conditioning as a Theoretical Mechanism 7

8 Purchase situations can be controlled by the stimulus properties of the situation rather than solely the instrumental ends served by the purchase. Through experience and use credit cards acquire the ability to elicit spending behavior. 8

9 CLASSICAL CONDITIONING Credit cards acquire the ability to elicit spending Spend more, spend more quickly, spending more likely 9

10 TABLE 3 No Credit Cards PresentCredit Cards PresentF(1,22) (sec) Toaster * Black & White TV * Lamp * Digital Clock * Pocket Camera * Home Stereo System * Dress ** Mixer ** Tent ** Saw ** Chess Set Cassette Tape Recorder *p<.05 **p<.10 10

11 DONATION TO CHARITY Amount Credit Cards Present$4.01 Credit Cards Absent$

12 AmountDecision TimeNumber Who Gave Credit Cards Present$ sec.13/15 Credit Cards Absent$ sec.5/15 12

13 CREDIT CARD STIMULI INCREASE TIPPING Level of Check 1 1 ($17.00) 2 ($23.00) 3 ($31.00) 4 ($47.00) Mode of Payment Credit Card$3.03 (17.98) 2 $3.92 (17.1)$4.91 (15.8)$8.04 (17.1) Cash$2.36 (13.9)$3.60 (15.6)$4.64 (14.9)$7.23 (15.4) 1 Amount of check was divided into quartiles. Amount in parenthesis represents the median within that quartile. 2 Average percentage of check. 13

14 APPLIED STUDY – CANDY STORE Total Pounds Credit cards present2.45* Credit cards absent1.88 *p<.05 14

15 CREDIT CARD CUES CAN BE CONDITIONED CREDIT CARD CUES PRESENTABSENT NEGATIVE HISTORIES$47.24$58.62 POSITIVE HISTORIES$69.46$

16 *OBEYS LAWS OF CONDITIONING *GENERALIZATION GENERALIZATION GRADIENTS Cues PresentAbsent Small$48.44$43.20 Regular$52.28$44.60 Large$59.84$


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