The psychological science of spending money

Abstract

This chapter discusses the psychological research related to the act of spending money, with the aim of understanding the underlying psychological processes involved. To that end, the emotions involved in spending money before, during, and after the money changes hands are explored, including the role of anticipated and anticipatory emotions, different orientations to the gains and losses inherent in an act of spending, and the process of hedonic adaptation. Additionally, given how fundamental choice is to the act of spending money, factors that influence the decision-making process are discussed, including the role that comparative processes and expectations play in the process of making decisions and evaluating their outcomes. In each case, particular attention is paid to the psychological forces that influence the ultimate goal underlying any act of spending: happiness. Finally, several concrete strategies for making purchases most likely to lead to success on this goal are identified, including purchasing experiences over possessions, spending pro-socially, and making meaningful purchases.