1. Want to spend less? Ditch the credit card and don’t shop when you are sad S. Begley Verity Barter, Andrew Bisby, Paddy Cullen, Gabrielle Gunn, Dan Mackinnon and Max Redmond Roche

2. Begley – An American Journalist who focused on consumer psychology Prelec, D., & Simester, D. (2001). Always Leave Home Without It. A Further Investigation of the Credit-Card Effect on Willingness to Pay. Marketing Letters, 12, 1, 5 - 12. Cryder, C.E., Lerner, J.S., Gross, J.J., & Dahl, R.E. (2008). Misery is not Miserly: Sad and Self - Focused Individuals Spend More. Psychological Science, 19, 6, 525 - 30.

3. ALWAYS LEAVE HOME WITHOUT IT… PRELEC, D., & SIMESTER, D. (2001). It is claimed that credit cards encourage spending Feinberg (1986) – credit card premium But there are still questions to be asked…

4. HYPOTHESIS People are willing to spend more when using a credit card than when paying with cash Two studies: Study 1 – real money transactions, for highly desirable goods Prelec, D., & Simester, D. (2001).

5. STUDY 1 - METHOD 2 pairs of sports tickets and a consolation prize MBA students at MIT - $2 for taking part. Cash vs card Predicted that participant would be willing to pay more by credit card than by cash. Prelec, D., & Simester, D. (2001).

6. STUDY 1 – RESULTS All 3 prizes – higher values for the credit card condition BUT... Depended on whether mean/median was compared. Only the Basketball tickets showed a significant difference for the mean and the median. Prelec, D., & Simester, D. (2001).

7. STUDY 2 Different anchoring points for cash and credit cards? Value was known and so acts as the anchor. They also wanted to see if exposure to credit card logos would increase willingness to pay. They auctioned a $175 restaurant voucher to MBA students. Prelec, D., & Simester, D. (2001).

8. STUDY 2 - METHOD Participants were split into four groups: 1.Paid by cash but were not exposed to logos 2.Paid by cash and were exposed to logos 3.Paid by credit card but were not exposed to logos 4.Paid by credit card and were exposed to logos Participants made a sealed bid for the voucher Prelec, D., & Simester, D. (2001).

9. STUDY 2 - RESULTS Payment Method Exposure CashCredit Card Logos $52.80$71.78 No Logos$77.08$67.12 Prelec, D., & Simester, D. (2001).

10. CONCLUSIONS No theory explaining the presence or size of the credit card premium in study 1 is given Not about how much you can afford to pay Payment method only has a significant effect on those exposed to credit card logos No evidence that exposure to credit card logos increases willingness to pay Prelec, D., & Simester, D. (2001).

11. WE SUGGEST… Willingness to pay and the credit card premium may be due to desirability of the prize Include a ‘cash instalments’ group What about debit cards? Age ranges and financial backgrounds Prelec, D., & Simester, D. (2001).

12. MISERY NOT MISERLY… CRYDER, LERNER, GROSS, DAHL (2008). James (1890) “material goods define the self” But is the misery-not-miserly effect consistent with this theory? Previous research has found that when participants are not self focused, emotion does not affect spending. (Salovey, 1992; Wood, Saltzberg & Goldsamt, 1990)

13. Cryder, Lerner, Gross, Dahl (2008).

14. Sadness increases the amount of money that people are prepared to spend on a commodity. 33 participants recruited by advertisement and offered $10 for taking part Emotion Induction Self-focused essay Buying Task Cryder, Lerner, Gross, Dahl (2008).

15. RESULTS Sad-condition bid more than neutral condition Only when self-focus was high Self focus explains the effect Cryder, Lerner, Gross, Dahl (2008).

16. CONCLUSIONS Sadness has an effect on spending only when self-focus is high Self-enhancement or self-value? Future research Cryder, Lerner, Gross, Dahl (2008).

17. WE SUGGEST… Only one stimulus used Sample size too small but representative of wider population $5 Incentive good idea but hard to quantify responses What about happy people? Cryder, Lerner, Gross, Dahl (2008).

18. OVERALL CONCLUSIONS Pay by cash not credit card… …and don’t shop when sad More important to be aware of your own spending habits Further research

19. REFERENCES Cryder, C.E., Lerner, J.S., Gross, J.J., & Dahl, R.E. (2008). Misery is not Miserly: Sad and Self - Focused Individuals Spend More. Psychological Science, 19, 6, 525 - 30. James, W. (1890). Principles of Psychology. New York: Holt. Prelec, D., & Simester, D. (2001). Always Leave Home Without It. A Further Investigation of the Credit-Card Effect on Willingness to Pay. Marketing Letters, 12, 1, 5 - 12. Salovey, P. (1992). Mood-induced self-focused attention. Journal of Personality and Social Psychology, 62, 699–707. Soman, Dilip. (1999). Effects of Payment Mechanism on Spending Behavior: The Illusion of Liquidity. Working Paper, Hong Kong University of Science and Technology, Hong Kong. Wood, J.V., Saltzberg, J.A., & Goldsamt, L.A. (1990). Does affect induce self-focused attention? Journal of Personality and Social Psychology, 58, 899–908.