Do you end up spending more when you feel hapless, and saving more when you feel empowered? According to research, it turns out this is indeed likely to happen. Thus, we add another fascinating aspect to the complexities of money that we already discussed in a three-part mini-series in this column.
When Andrew Jackson declared that “Money is power,” he probably realised that the reverse is also true. Indeed, we do see how money can buy power. Similarly, recent political scams have shown us how the powerful can also use their power to make money. However, this is not the focus of this column. We will explore another corollary of Jackson’s famous proclamation — probably one that is not as quote-worthy, but something of immense importance to marketers, economists and bankers — does feeling powerful lead you to save more money? Recent research published by Emily Garbinsky, Anne-Kathrin Klesse and Jennifer Aaker sets out to assert exactly this, in a series of fascinating experiments.
When Andrew Jackson declared that “Money is power,” he probably realised that the reverse is also true
In one of their experiments, Garbinsky and colleagues recruited student volunteers from Tillburg University, and randomly made one-third of them feel powerful, another one-third feel powerless, and the final one-third were not manipulated to any mental state (a control condition). How did they do that? The ‘powerful’ volunteers were made to write a small passage recalling how they felt empowered and in control over someone, while the ‘powerless’ were made to write about how someone else had power over them. Try this exercise — it is a tried and tested method used by psychologists to manipulate your mood, and in certain conditions (not this), could even be considered ethically questionable!
Once they were primed, the respondents were asked to imagine that they had €100, and then asked how much they wanted to invest in savings. As predicted, the ‘powerful’ ones intended, on an average, to save more than those who were primed to feel powerless. In another experiment, they showed the same results by making ‘empowered’ people sit on high chairs, while the ‘powerless’ were made to sit on a low chair (watch this Charlie Chaplin masterpiece to see how this works to manipulate power perceptions). Other experiments with minor variants provided similar results as well.
Try to feel empowered, and you could save more money… Watch your spending when you feel powerless — maybe that is the reason you are becoming one of the many urban poor!
What do these results mean to you, the customer? Try to feel empowered, and you could save more money. Also look out for those low days, when you feel helpless, possibly as the result of a nasty boss, a fight with your significant other, a political outcome you do not like, a corrupt cop or legal troubles. Watch your spending when you feel powerless — maybe that is the reason you are becoming one of the many urban poor!
As for banks and fiscal policy makers — if you want to make your citizens, especially the poor and powerless, save more money, do your best to make them feel empowered. It could be small things like being accountable to your electorate, making them feel that their vote counts, and that their concerns are addressed.
Finally, if you are a retailer who wants customers to spend more at your store, do exactly the opposite — maybe make your customers overawed and powerless to make them spend more (if you can achieve this by ethically legitimate means!).
This column is intended to showcase interesting academic research in marketing. The technically oriented reader is encouraged to read the original research articles cited in the column.
Prithwiraj Mukherjee is Assistant Professor of Marketing, IIM Bangalore. Views are personal.
Lead visual: Angela Anthony Pereira
Subscribe to FactorDaily
Our daily brief keeps thousands of readers ahead of the curve. More signals, less noise.
Subscribe to our WhatsApp Alerts