Retail Therapy Has Benefits
Many of us are guilty of retail therapy, or splurging after a lousy day. New research says that shopping makes a person less sad because it gives a sense of control. That benefit is fleeting, however. A better idea is to channel this need to more productive uses.
So retail therapy is not an irredeemable evil, like heroin addiction. There are non-economic factors that influence our money behavior. To make better decisions with our money, we need to understand the psychological underpinnings of shopping for pleasure.
In their paper The Benefits of Retail Therapy: Choosing To Buy Reduces Residual Sadness; University of Michigan School of Business Marketing professors Scott Rick and Beatriz Pereira and doctoral candidate Katherine Burson find that depression can lead people to go shopping they likely otherwise wouldn’t do.
Generally, dispensing money you don't plan to spend is an unwise way to relieve stress or sadness. Over-spending is a self-inflicted wound. But what is interesting is that, across three separate experiments, the study’s results show it’s not the acquisition of new products that makes you happier – it’s the process of choosing to buy something. From that, the researchers hypothesize that choosing consumer items gives us a sense of control.
“When it comes to alleviating sadness, actively choosing between products is essential," Professor Rick says. "Shopping is a natural, easy vehicle for choice. There are other situations that afford opportunities to choose and restore personal control, but they may be less tempting and harder to find than the mall."
The researchers acknowledge that there may be other mechanisms at work in addition to the regaining feelings of control. One weakness of retail therapy: Shopping’s impact on sadness is relatively mild and demonstrably doesn’t bring lasting happiness.
There are other caveats. The experiments were very small, with only a few hundred participants total. They measured the short-term costs and benefits of shopping without any view on long-term outcomes.
But the results remain highly interesting because they run counter to conventional wisdom and speak to a non-economic effects of financial decisions.
The financial planning profession tends to focus mainly on the economic consequences of financial decisions, ignoring all the other results each financial decision produces. While as a profession we often warn people away from retail therapy because it has an economic cost, we ignore its emotional and physical dimensions.
If you habitually shop to beat the blues, the study indicates that your motive is more abstract than seeking a pair of jeans at the mall. Perhaps there are less financially destructive ways to regain a sense of choice and control.
If you buy something that actually brings lasting pleasure, the emotional benefits might be great enough that the economic costs are tolerable. Maybe you can exercise choice for something more meaningful, such as actively planning a vacation when you get home rather than stopping by the department store. This involves more deliberate planning and budgeting, and results in good memories rather than fleeting stress relief.
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Nathan Gehring, CFP, is an associate planner at Keats Connelly, the largest cross-border wealth management firm in North America. It specializes in helping Canadians and Americans realize their dream of a cross-border lifestyle. He is based in Boynton Beach, Fla.
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