Skip to main content
SpringerLink
Log in

The effect of financial scarcity on discretionary spending, borrowing, and investing

  • Original Empirical Research
  • Published:
Journal of the Academy of Marketing Science Aims and scope Submit manuscript

A Correction to this article was published on 27 November 2021

This article has been updated

Abstract

Past research indicates that individuals with scarce resources focus on urgent needs. We hypothesize and find that individuals with scarce financial resources have greater discretionary expenditures such that they engage in more discretionary spending, borrowing, and investing. We demonstrate that one possible explanation for why those with scarce financial resources have greater discretionary expenditures is because they have more optimistic future perceptions. We support our predictions using a sample of over 60,000 observations from a survey in rural India, two archival datasets from surveys in Italy and Germany, and two preregistered online experiments. We control, test, and rule out different alternative explanations. The results of this research extend the findings in the financial scarcity and discretionary consumption literature. Additionally, we provide actionable guidelines for managers and public policy makers on how to nudge individuals with financial scarcity.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Change history

Notes

  1. Other Backward Class (OBC) is a term used by the Government of India to classify castes (i.e., a form of stratification) that are socially or educationally disadvantaged.

References

  • Ahluwalia, R., Burnkrant, R. E., & Unnava, H. R. (2000). Consumer response to negative publicity: The moderating role of commitment. Journal of Marketing Research, 37(2), 203–214.

    Google Scholar 

  • Amar, M., Ariely, D., Ayal, S., Cryder, C. E., & Rick, S. I. (2011). Winning the battle but losing the war: The psychology of debt management. Journal of Marketing Research, 48(SPL), S38–S50.

    Google Scholar 

  • Bauer, J. C., Morwitz, V. G., & Nagengast, L. (2021). Interest-free financing promotions increase consumers’ demand for credit for experiential goods. Journal of the Association for Consumer Research, 6(1), 54–66.

    Google Scholar 

  • Bellante, D., & Foster, A. C. (1984). Working wives and expenditure on services. Journal of Consumer Research, 11(2), 700–707.

    Google Scholar 

  • Berman, J. Z., Tran, A. T., Lynch, J. G., Jr., & Zauberman, G. (2016). Expense neglect in forecasting personal finances. Journal of Marketing Research, 53(4), 535–550.

    Google Scholar 

  • Bernheim, B. D., Garrett, D. M., & Maki, D. M. (2001). Education and saving: The long-term effects of high school financial curriculum mandates. Journal of Public Economics, 80(3), 435–465.

    Google Scholar 

  • Booth, A. (1984). Responses to scarcity. Sociological Quarterly, 25(1), 113–124.

    Google Scholar 

  • Bricker, J., Dettling, L. J., Henriques, A., Hsu, J. W., Moore, K. B., Sabelhaus, J., ..., & Windle, R. A. (2014). Changes in US family finances from 2010 to 2013: Evidence from the Survey of Consumer Finances. Federal Reserve Bulletin, 100(4), 1-41.

  • Briers, B., & Laporte, S. (2013). A wallet full of calories: The effect of financial dissatisfaction on the desire for food energy. Journal of Marketing Research, 50(6), 767–781.

    Google Scholar 

  • Burger, J. M., & Burns, L. (1988). The illusion of unique invulnerability and the use of effective contraception. Personality and Social Psychology Bulletin, 14(2), 264–270.

    Google Scholar 

  • Callan, M. J., Shead, N. W., & Olson, J. M. (2011). Personal relative deprivation, delay discounting, and gambling. Journal of Personality and Social Psychology, 101(5), 955.

    Google Scholar 

  • Campbell, J., Greenauer, N., Macaluso, K., & End, C. (2007). Unrealistic optimism in internet events. Computers in Human Behavior, 23(3), 1273–1284.

    Google Scholar 

  • Cannon, C., Goldsmith, K., & Roux, C. (2019). A self-regulatory model of resource scarcity. Journal of Consumer Psychology, 29(1), 104–127.

    Google Scholar 

  • Carvalho, L. S., Meier, S., & Wang, S. W. (2016). Poverty and economic decision-making: Evidence from changes in financial resources at payday. American Economic Review, 106(2), 260–284.

    Google Scholar 

  • Carver, C. S. (2013). Life Orientation Test-Revised (LOT-R). Measurement Instrument Database for the Social Science. Retrieved from www.midss.ie.

  • Chambers, J. R., Windschitl, P. D., & Suls, J. (2003). Egocentrism, event frequency, and comparative optimism: When what happens frequently is “more likely to happen to me.” Personality and Social Psychology Bulletin, 29(11), 1343–1356.

    Google Scholar 

  • Chan, E., Sengupta, J., & Mukhopadhyay, A. (2013). The antecedents of anticipatory purchase: Reconciling the two routes to optimism. Journal of Consumer Psychology, 23(1), 90–105.

    Google Scholar 

  • Choe, Y., & Kan, C. (2021). Budget depreciation: When budgeting early increases spending. Journal of Consumer Research, 47(6), 937–958.

    Google Scholar 

  • Cialdini, R. B. (2009). Influence: Science and practice. Pearson Education.

    Google Scholar 

  • Cleaver, F. (2005). The inequality of social capital and the reproduction of chronic poverty. World Development, 33(6), 893–906.

    Google Scholar 

  • Cole, S. A., Thompson, J., & Tufano, P. (2008). Where does it go? Spending by the financially constrained. Spending by the Financially Constrained (April 11, 2008). Harvard Business School Finance Working Paper, (08–083).

  • Cook, L. A., & Sadeghein, R. (2018). Effects of perceived scarcity on financial decision making. Journal of Public Policy & Marketing, 37(1), 68–87.

    Google Scholar 

  • Crouch, G. I., Oppewal, H., Huybers, T., Dolnicar, S., Louviere, J. J., & Devinney, T. (2007). Discretionary expenditure and tourism consumption: Insights from a choice experiment. Journal of Travel Research, 45, 247–258.

    Google Scholar 

  • Dadzie, K. Q. (1989). Demarketing strategy in shortage marketing environment. Journal of the Academy of Marketing Science, 17(2), 157–165.

    Google Scholar 

  • Danziger, P. N. (2004). Why people buy things they don’t need. Paramount Market Publishing.

    Google Scholar 

  • Daoud, A. (2010). Robbins and Malthus on scarcity, abundance, and sufficiency: The missing sociocultural element. American Journal of Economics and Sociology, 69(4), 1206–1229.

    Google Scholar 

  • Dardis, R., Soberon-Ferrer, H., & Tsav, Y. Y. (1991). Determinants of Household Expenditure for Services. Journal of Consumer Research, 17, 385–397.

    Google Scholar 

  • Das, G., Jain, S. P., Maheswaran, D., Slotegraaf, R. J., & Srinivasan, R. (2021). Pandemics and marketing: insights, impacts, and research opportunities. Journal of the Academy of Marketing Science, 1–20.

  • De La Rosa, W., & Tully, S. (2020). The Impact of Payment Frequency on Subjective Wealth Perceptions and Discretionary Spending, in NA - Advances in Consumer Research Volume 48, eds. Jennifer Argo, Tina M. Lowrey, and Hope Jensen Schau, Duluth, MN : Association for Consumer Research, Pages: 1064–1058.

  • De La Rosa, W., Turner, B., & Aaker, J. (2020). The friday payday effect: The impact of intraweek payday timing on deserving justifications and discretionary spending. ACR North American Advances.

  • Deloitte Insights (2016). Does Scarcity Make You Dumb? A behavioral understanding of how scarcity diminishes our decision making and control. Retrieved by: https://www2.deloitte.com/us/en/insights/focus/behavioral-economics/scarcity-mind-set-improving-decision-making.html.

  • Dickerson, A. M. (2016). Financial scarcity and financial decision-making. Arizona Law Review, 58, 137.

    Google Scholar 

  • Diener, E., Suh, E. M., Lucas, R. E., & Smith, H. L. (1999). Subjective well-being: Three decades of progress. Psychological Bulletin, 125(2), 276–302.

    Google Scholar 

  • Disatnik, D., & Steinhart, Y. (2015). Need for cognitive closure, risk aversion, uncertainty changes, and their effects on investment decisions. Journal of Marketing Research, 52(3), 349–359.

    Google Scholar 

  • Du, R. Y., & Kamakura, W. A. (2008). Where did all that money go? Understanding how consumers allocate their consumption budget. Journal of Marketing, 72(6), 109–131.

    Google Scholar 

  • Dubois, D., Rucker, D. D., & Galinsky, A. D. (2012). Super size me: Product size as a signal of status. Journal of Consumer Research, 38(6), 1047–1062.

    Google Scholar 

  • Durante, K. M., Griskevicius, V., Redden, J. P., & Edward White, A. (2015). Spending on daughters versus sons in economic recessions. Journal of Consumer Research, 42(3), 435–457.

    Google Scholar 

  • Dynan, K. E., Skinner, J., & Zeldes, S. P. (2004). Do the rich save more? Journal of Political Economy, 112(2), 397–444.

    Google Scholar 

  • Eagly, A. H., & Chaiken, S. (1993). The psychology of attitudes. Harcourt brace Jovanovich College Publishers.

    Google Scholar 

  • Fan, L., Li, X., & Jiang, Y. (2019). Room for opportunity: Resource scarcity increases attractiveness of range marketing offers. Journal of Consumer Research, 46(1), 82–98.

    Google Scholar 

  • Faul, F., Erdfelder, E., Lang, A. G., & Buchner, A. (2007). G* Power 3: A flexible statistical power analysis program for the social, behavioral, and biomedical sciences. Behavior Research Methods, 39(2), 175–191.

    Google Scholar 

  • Ferber, R. (1956). Consumer expenditures for services in the United States. Journal of Marketing, 21(1), 24–35.

    Google Scholar 

  • Fernbach, P. M., Kan, C., & Lynch, J. G., Jr. (2015). Squeezed: Coping with constraint through efficiency and prioritization. Journal of Consumer Research, 41(5), 1204–1227.

    Google Scholar 

  • Fitch, C., Hamilton, S., Bassett, P., & Davey, R. (2011). The relationship between personal debt and mental health: a systematic review. Mental Health Review Journal.

  • Fornell, C., Rust, R. T., & Dekimpe, M. G. (2010). The effect of customer satisfaction on consumer spending growth. Journal of Marketing Research, 47(1), 28–35.

    Google Scholar 

  • Fritzsche, D. J. (1981). An analysis of energy consumption patterns by stage of family life cycle. Journal of Marketing Research, 18(2), 227–232.

    Google Scholar 

  • Gennetian, L. A., & Shafir, E. (2015). The persistence of poverty in the context of financial instability: A behavioral perspective. Journal of Policy Analysis and Management, 34(4), 904–936.

    Google Scholar 

  • Gierl, H., & Huettl, V. (2010). Are scarce products always more attractive? The interaction of different types of scarcity signals with products’ suitability for conspicuous consumption. International Journal of Research in Marketing, 27(3), 225–235.

    Google Scholar 

  • Goldsmith, K., Griskevicius, V., & Hamilton, R. (2020). Scarcity and consumer decision making: Is scarcity a mindset, a threat, a reference point, or a journey? Journal of the Association for Consumer Research, 5(4), 358–364.

    Google Scholar 

  • Goldsmith, K., Roux, C., & Wilson, A. V. (2019). Can thoughts of having less ever promote prosocial preferences? The relationship between scarcity, construal level, and sustainable product adoption. Journal of the Association for Consumer Research, 5(1), 70–82.

    Google Scholar 

  • Goldstein, S. (1968). The aged segment of the market 1950 and 1960. Journal of Marketing, 32(2), 62–68.

    Google Scholar 

  • Graham, R., & Kristina, F. (2008). The earnings effects of advertising expenditures during recessions. American Association of Advertising Agencies.

    Google Scholar 

  • Griskevicius, V., Ackerman, J. M., Cantú, S. M., Delton, A. W., Robertson, T. E., Simpson, J. A., ..., & Tybur, J. M. (2013). When the economy falters, do people spend or save? Responses to resource scarcity depend on childhood environments. Psychological Science, 24(2), 197-205.

  • Gross, D. B., & Souleles, N. S. (2002). Do liquidity constraints and interest rates matter for consumer behavior? Evidence from credit card data. The Quarterly Journal of Economics, 117(1), 149–185.

    Google Scholar 

  • Hamilton, R. (2021). Scarcity and coronavirus. Journal of Public Policy & Marketing, 40(1), 99–100.

    Google Scholar 

  • Hamilton, R., Thompson, D., Bone, S., Chaplin, L. N., Griskevicius, V., Goldsmith, K., ..., & Zhu, M. (2019). The effects of scarcity on consumer decision journeys. Journal of the Academy of Marketing Science, 47(3), 532-550

  • Haushofer, J., & Fehr, E. (2014). On the psychology of poverty. Science, 344(6186), 862–867.

    Google Scholar 

  • Hawes, D. K. (1979). Leisure and consumer behavior. Journal of the Academy of Marketing Science, 7(4), 391–403.

    Google Scholar 

  • Haws, K. K. L., Bearden, W., & Nenkov, G. (2012). Consumer spending self-control effectiveness and outcome elaboration prompts. Journal of the Academy of Marketing Science, 40(5), 695–710.

    Google Scholar 

  • Hayes, A. F., & Preacher, K. J. (2014). Statistical mediation analysis with a multicategorical independent variable. British Journal of Mathematical and Statistical Psychology, 67(3), 451–470.

    Google Scholar 

  • Helweg-Larsen, M., & Shepperd, J. A. (2001). Do moderators of the optimistic bias affect personal or target risk estimates? A review of the literature. Personality and Social Psychology Review, 5(1), 74–95.

    Google Scholar 

  • Hill, R. P. (2001). Surviving in a material world: Evidence from ethnographic consumer research on people in poverty. Journal of Contemporary Ethnography, 30, 364–391. https://doi.org/10.1177/089124101030004002

    Article  Google Scholar 

  • Hill, R. P. (2020). Does research on scarcity apply to impoverished consumers? Journal of the Association for Consumer Research, 5(4), 439–443.

    Google Scholar 

  • Hirst, D., Joyce, E., & Schadewald, M. (1994). Mental Accounting and outcome contiguity in consumer-borrowing decisions. Organizational Behavior and Human Decision Processes, 58(1), 136–152.

    Google Scholar 

  • Hock, S. J., Bagchi, R., & Anderson, T. M. (2020). Promotional games increase consumer conversion rates and spending. Journal of Consumer Research, 47(1), 79–99.

    Google Scholar 

  • Huebner, J., Fleisch, E., & Ilic, A. (2020). Assisting mental accounting using smartphones: Increasing the salience of credit card transactions helps consumer reduce their spending. Computers in Human Behavior, 113, 106504.

    Google Scholar 

  • Jachimowicz, J. M., Chafik, S., Munrat, S., Prabhu, J. C., & Weber, E. U. (2017). Community trust reduces myopic decisions of low-income individuals. Proceedings of the National Academy of Sciences, 114(21), 5401–5406.

    Google Scholar 

  • Jiang, Y., Su, L., & Zhu, R. (2019). The shape of money: The impact of financial resources on product shape preference. Journal of the Association for Consumer Research, 4(4), 436–445.

    Google Scholar 

  • Johnson, R. W., Mermin, G., & Murphy, D. (2007). The impact of late-career health and employment shocks on social security and other wealth. Urban Institute.

  • Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1991). Anomalies: The endowment effect, loss aversion, and status quo bias. Journal of Economic Perspectives, 5(1), 193–206.

    Google Scholar 

  • Kamakura, W. A., & Du, R. Y. (2012). How economic contractions and expansions affect expenditure patterns. Journal of Consumer Research, 39(2), 229–247.

    Google Scholar 

  • Karlsson, N., Gärling, T., Dellgran, P., & Klingander, B. (2005). Social comparison and consumer behavior: When feeling richer or poorer than others is more important than being so. Journal of Applied Social Psychology, 35(6), 1206–1222.

    Google Scholar 

  • Kim, H., & DeVaney, S. A. (2001). The determinants of outstanding balances among credit card revolvers. Financial Counseling and Planning, 12(1), 67–77.

    Google Scholar 

  • Kleiman, E. M., Chiara, A. M., Liu, R. T., Jager-Hyman, S. G., Choi, J. Y., & Alloy, L. B. (2017). Optimism and well-being: A prospective multi-method and multi-dimensional examination of optimism as a resilience factor following the occurrence of stressful life events. Cognition and Emotion, 31(2), 269–283.

    Google Scholar 

  • Kristofferson, K., McFerran, B., Morales, A. C., & Dahl, D. W. (2017). The dark side of scarcity promotions: How exposure to limited-quantity promotions can induce aggression. Journal of Consumer Research, 43(5), 683–706.

    Google Scholar 

  • Krosch, A. R., & Amodio, D. M. (2014). Economic scarcity alters the perception of race. Proceedings of the National Academy of Sciences, 111(25), 9079–9084.

    Google Scholar 

  • Kwon, K. N., & Lee, J. (2009). The effects of reference point, knowledge, and risk propensity on the evaluation of financial products. Journal of Business Research, 62(7), 719–725.

    Google Scholar 

  • Lamey, L., Deleersnyder, B., Dekimpe, M. G., & Steenkamp, J. B. E. (2007). How business cycles contribute to private-label success: Evidence from the United States and Europe. Journal of Marketing, 71(1), 1–15.

    Google Scholar 

  • Laran, J., & Salerno, A. (2013). Life-history strategy, food choice, and caloric consumption. Psychological Science, 24(2), 167–173.

    Google Scholar 

  • Lee-Yoon, A., Donnelly, G. E., & Whillans, A. V. (2020). Overcoming resource scarcity: consumers’ response to gifts intending to save time and money. Journal of the Association for Consumer Research, 5(4), 391–403.

    Google Scholar 

  • Lek, Y. Y., & Bishop, G. D. (1995). Perceived vulnerability to illness threats: The role of disease type, risk factor perception and attributions. Psychology and Health, 10(3), 205–217.

    Google Scholar 

  • Leonhardt, M. (2019). Nearly 25% of Americans Are Going into Debt Trying to Pay for Necessities Like Food, CNBC (May 23), https://www.cnbc.com/2019/05/23/nearly-25-percent-of-americans-are-going-into-debt-trying-to-pay-for-necessities.html.

  • Lepisto, L. R., & Hannaford, W. (1980). Purchase constraint analysis: An alternative perspective for marketers. Journal of the Academy of Marketing Science, 8, 12–25.

    Google Scholar 

  • Lewis, O. (1966). The culture of poverty. Scientific American, 215(4), 19–25.

    Google Scholar 

  • Ludwig, J., Duncan, G. J., & Hirschfield, P. (2001). Urban poverty and juvenile crime: Evidence from a randomized housing-mobility experiment. The Quarterly Journal of Economics, 116(2), 655–679.

    Google Scholar 

  • Luo, L., Ratchford, B. T., & Yang, B. (2013). Why we do what we do: A model of activity consumption. Journal of Marketing Research, 50(1), 24–43.

    Google Scholar 

  • Lynch, J. G., Jr., & Zauberman, G. (2006). When do you want it? Time, decisions, and public policy. Journal of Public Policy & Marketing, 25(1), 67–78.

    Google Scholar 

  • MacKinnon, D. P. (2000). Contrasts in multiple mediator models. Multivariate Applications in Substance Use Research: New Methods for New Questions, 141, 160.

    Google Scholar 

  • Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2013). Poverty impedes cognitive function. Science, 341(6149), 976–980.

    Google Scholar 

  • Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2020). Scarcity and cognitive function around payday: A conceptual and empirical analysis. Journal of the Association for Consumer Research, 5(4), 365–376.

    Google Scholar 

  • Madrian, B. C., Hershfield, H. E., Sussman, A. B., Bhargava, S., Burke, J., Huettel, S. A., ..., & Shu, S. B. (2017). Behaviorally informed policies for household financial decisionmaking. Behavioral Science & Policy, 3(1), 26-40.

  • Malika, M., Maheswaran, D., & Jain, S. P. (2020). Financial Scarcity and Normative Influence: Discretionary Purchase Decisions Across Cultures. Available at SSRN 3750209.

  • Markowitz, H. (1952). The utility of wealth. Journal of Political Economy, 60(2), 151–158.

    Google Scholar 

  • Martin, K. D., & Hill, R. P. (2012). Life satisfaction, self-determination, and consumption adequacy at the bottom of the pyramid. Journal of Consumer Research, 38(6), 1155–1168. https://doi.org/10.1086/661528

    Article  Google Scholar 

  • Martin, K. D., & Hill, R. P. (2015). Saving and well-being at the base of the pyramid: Implications for transformative financial services delivery. Journal of Service Research, 18(3), 405–421.

    Google Scholar 

  • Maxwell, S. E., & Cole, D. A. (2007). Bias in cross-sectional analyses of longitudinal mediation. Psychological Methods, 12(1), 23–44.

    Google Scholar 

  • McKinnon, G. F., Smith, M. E., & Hunt, H. K. (1985). Hoarding behavior among consumers: Conceptualization and marketing implications. Journal of the Academy of Marketing Science, 13, 340–351.

    Google Scholar 

  • Mehta, R., & Zhu, M. (2016). Creating when you have less: The impact of resource scarcity on product use creativity. Journal of Consumer Research, 42(5), 767–782.

    Google Scholar 

  • Mekouar, D. (2019) What Americans Really Earn After Taxes | Voice of America - English (voanews.com)

  • Merton, R. C. (1972). An analytic derivation of the efficient portfolio frontier. Journal of Financial and Quantitative Analysis, 1851–1872.

  • Minton, B. A., & Schrand, C. (1999). The impact of cash flow volatility on discretionary investment and the costs of debt and equity financing. Journal of Financial Economics, 54(3), 423–460.

    Google Scholar 

  • Moeini-Jazani, M., Albalooshi, S., & Seljeseth, I. M. (2019). Self-affirmation reduces delay discounting of the financially deprived. Frontiers in Psychology, 10, 1729.

    Google Scholar 

  • Moschis, G. P. (2007). Stress and consumer behavior. Journal of the Academy of Marketing Science, 35, 430–444.

    Google Scholar 

  • Mrkva, K., Posner, N. A., Reeck, C., & Johnson, E. J. (2021). Do nudges reduce disparities? Choice architecture compensates for low consumer knowledge. Journal of Marketing, 0022242921993186.

  • Mullainathan, S., & Shafir, E. (2013). Scarcity: Why having too little means so much. Macmillan. Time Books: Henry Holt & Company LLC. New York: NY.

  • Netemeyer, R. G., Warmath, D., Fernandes, D., & Lynch, J. G., Jr. (2018). How am I doing? Perceived financial well-being, its potential antecedents, and its relation to overall well-being. Journal of Consumer Research, 45(1), 68–89.

    Google Scholar 

  • Ordabayeva, N., & Chandon, P. (2011). Getting ahead of the Joneses: When equality increases conspicuous consumption among bottom-tier consumers. Journal of Consumer Research, 38(1), 27–41.

    Google Scholar 

  • Ostheimer, R. H. (1958). Who buys what? Life’s study of consumer expenditures. Journal of Marketing, 22(3), 260–272.

    Google Scholar 

  • Ozturk, A., & Cavusgil, S. T. (2019). Global convergence of consumer spending: Conceptualization and propositions. International Business Review, 28(2), 294–304.

    Google Scholar 

  • Paas, F. G. (1992). Training strategies for attaining transfer of problem-solving skill in statistics: A cognitive-load approach. Journal of Educational Psychology, 84(4), 429.

    Google Scholar 

  • Paley, A., Tully, S. M., & Sharma, E. (2019). Too constrained to converse: The effect of financial constraints on word of mouth. Journal of Consumer Research, 45(5), 889–905.

    Google Scholar 

  • Papadopoulos, N. (1983). Shortage marketing: A comprehensive framework. Journal of the Academy of Marketing Science, 11, 40–60.

    Google Scholar 

  • Pepper, G., & Nettle, D. (2017). Strengths, altered investment, risk management, and other elaborations on the behavioural constellation of deprivation. Behavioral and Brain Sciences, 40, e346.

    Google Scholar 

  • Puri, M., & Robinson, D. T. (2007). Optimism and economic choice. Journal of Financial Economics, 86(1), 71–99.

    Google Scholar 

  • Reimann, M., Nenkov, G. Y., MacInnis, D., & Morrin, M. (2014). The role of hope in financial risk seeking. Journal of Experimental Psychology: Applied, 20(4), 349.

    Google Scholar 

  • Rodeheffer, C. D., Hill, S. E., & Lord, C. G. (2012). Does this recession make me look black? The effect of resource scarcity on the categorization of biracial faces. Psychological Science, 23(12), 1476–1478.

    Google Scholar 

  • Rogers, D. S., & Green, H. L. (1978). Changes in Consumer Food Expenditure Patterns: What are the implications for a retailer’s strategy? Journal of Marketing, 42(2), 14–19.

    Google Scholar 

  • Roux, C., Goldsmith, K., & Bonezzi, A. (2015). On the psychology of scarcity: When reminders of resource scarcity promote selfish (and generous) behavior. Journal of Consumer Research, 42(4), 615–631.

    Google Scholar 

  • Rucker, D. D., Dubois, D., & Galinsky, A. D. (2011). Generous paupers and stingy princes: Power drives consumer spending on self versus others. Journal of Consumer Research, 37(6), 1015–1029.

    Google Scholar 

  • Rucker, D. D., & Galinsky, A. D. (2008). Desire to acquire: Powerlessness and compensatory consumption. Journal of Consumer Research, 35(2), 257–267.

    Google Scholar 

  • Salerno, A., & Escoe, B. (2020). Resource scarcity increases the value of pride. Journal of the Association for Consumer Research, 5(4), 458–469.

    Google Scholar 

  • Sarial-Abi, G., & Ulqinaku, A. (2020). Financial constraints influence how consumers evaluate approach-framed versus avoidance-framed messages. Journal of Advertising, 49(3), 270–291.

    Google Scholar 

  • Saving and Old-Age Provision in Germany (SAVE) Dataset (n.d.).

  • Scheier, M. F., & Carver, C. S. (1985). Optimism, coping, and health: Assessment and implications of generalized outcome expectancies. Health Psychology, 4(3), 219.

    Google Scholar 

  • Scopelliti, I., Cillo, P., Busacca, B., & Mazursky, D. (2014). How do financial constraints affect creativity? Journal of Product Innovation Management, 31(5), 880–893.

    Google Scholar 

  • Semon, T. T. (1962). Family Income and Spending Capacity. Journal of Marketing, 26(2), 26–30.

    Google Scholar 

  • Shah, A. K., Mullainathan, S., & Shafir, E. (2012). Some consequences of having too little. Science, 338(6107), 682–685.

    Google Scholar 

  • Shah, A. K., Shafir, E., & Mullainathan, S. (2015). Scarcity frames value. Psychological Science, 26(4), 402–412.

    Google Scholar 

  • Sharma, E., & Alter, A. L. (2012). Financial deprivation prompts consumers to seek scarce goods. Journal of Consumer Research, 39(3), 545–560.

    Google Scholar 

  • Sharma, E., & Keller, P. A. (2017). A penny saved is not a penny earned: When decisions to earn and save compete for consumer resources. Journal of the Association for Consumer Research, 2(1), 64–77.

    Google Scholar 

  • Sharma, E., Mazar, N., Alter, A. L., & Ariely, D. (2014). Financial deprivation selectively shifts moral standards and compromises moral decisions. Organizational Behavior and Human Decision Processes, 123(2), 90–100.

    Google Scholar 

  • Sharma, E., Tully, S., & Cryder, C. (2021). Psychological Ownership of (Borrowed) Money. Journal of Marketing Research, 0022243721993816.

  • Shepperd, J. A., Ouellette, J. A., & Fernandez, J. K. (1996). Abandoning unrealistic optimism: Performance estimates and the temporal proximity of self-relevant feedback. Journal of Personality and Social Psychology, 70(4), 844.

    Google Scholar 

  • Shiv, B., Loewenstein, G., Bechara, A., Damasio, H., & Damasio, A. R. (2005). Investment behavior and the negative side of emotion. Psychological Science, 16(6), 435–439.

    Google Scholar 

  • Sokolova, T., & Li, Y. (2021). Mix or match? Consumer spending decisions in conditional promotions. Journal of Consumer Psychology, 31(1), 91–102.

    Google Scholar 

  • Soman, D., & Cheema, A. (2002). The effect of credit on spending decisions: The role of the credit limit and credibility. Marketing Science, 21(1), 32–53.

    Google Scholar 

  • Spiller, S. A. (2011). Opportunity cost consideration. Journal of Consumer Research, 38(4), 595–610.

    Google Scholar 

  • Srinivasan, R., Gary, L. L., & Arvind, R. (2005). Turning adversity into advantage: Does proactive marketing during a recession pay off? International Journal of Research in Marketing, 22, 109–125.

    Google Scholar 

  • Stilley, K. M., Inman, J. J., & Wakefield, K. L. (2010). Spending on the fly: Mental budgets, promotions, and spending behavior. Journal of Marketing, 74(3), 34–47.

    Google Scholar 

  • Suri, R., Kohli, C., & Monroe, K. B. (2007). The effects of perceived scarcity on consumers’ processing of price information. Journal of the Academy of Marketing Science, 35(1), 89–100.

    Google Scholar 

  • Sussman, A. B., & Shafir, E. (2012). On assets and debt in the psychology of perceived wealth. Psychological Science, 23(1), 101–108.

    Google Scholar 

  • Swaminathan, V., Page, K. L., & Gürhan-Canli, Z. (2007). “My” brand or “our” brand: The effects of brand relationship dimensions and self-construal on brand evaluations. Journal of Consumer Research, 34(2), 248–259.

    Google Scholar 

  • Taylor, S. E., & Brown, J. D. (1988). Illusion and well-being: A social psychological perspective on mental health. Psychological Bulletin, 103(2), 193.

    Google Scholar 

  • Thaler, R. H., & Benartzi, S. (2004). Save more tomorrowTM: Using behavioral economics to increase employee saving. Journal of Political Economy, 112(S1), S164–S187.

    Google Scholar 

  • The Survey on Household Income and Wealth (SHIW), Bank of Italy (n.d.).

  • Thompson, D. V., Banerji, I., & Hamilton, R. W. (2020). Scarcity of choice: The effects of childhood socioeconomic status on consumers’ responses to substitution. Journal of the Association for Consumer Research, 5(4), 415–426.

    Google Scholar 

  • Tobin, J. (1958). Estimation of relationships for limited dependent variables. Econometrica: Journal of the Econometric Society, 24–36.

  • Tully, S. M., Hershfield, H. E., & Meyvis, T. (2015). Seeking lasting enjoyment with limited money: Financial constraints increase preference for material goods over experiences. Journal of Consumer Research, 42(1), 59–75.

    Google Scholar 

  • Tully, S. M., & Sharma, E. (2018). Context-dependent drivers of discretionary debt decisions: Explaining willingness to borrow for experiential purchases. Journal of Consumer Research, 44(5), 960–973.

    Google Scholar 

  • Van Kerckhove, A., Lunardo, R., & Fitzsimons, G. J. (2020). Monetary scarcity leads to increased desire for assortment. Journal of the Association for Consumer Research, 5(4), 377–390.

    Google Scholar 

  • Watson, D., Clark, L. A., & Tellegen, A. (1988). Development and validation of brief measures of positive and negative affect: The PANAS scales. Journal of Personality and Social Psychology, 54(6), 1063.

    Google Scholar 

  • Weinstein, N. D. (1980). Unrealistic optimism about future life events. Journal of Personality and Social Psychology, 39(5), 806.

    Google Scholar 

  • Weinstein, N. D. (1982). Unrealistic optimism about susceptibility to health problems. Journal of Behavioral Medicine, 5(4), 441–460.

    Google Scholar 

  • Weinstein, N. D., & Klein, W. M. (1995). Resistance of personal risk perceptions to debiasing interventions. Health Psychology, 14(2), 132.

    Google Scholar 

  • Weisbaum, H. (2019). In Credit Card Debt? Forget Skipping Lattes and Focus on These Areas of Spending Instead, NBC News (July 30), https://www.nbcnews.com/better/lifestyle/credit-card-debt-forget-skipping-lattes-focus-these-areas-spending-ncna1035761.

  • Wilcox, K., Block, L. G., & Eisenstein, E. M. (2011). Leave home without it? The effects of credit card debt and available credit on spending. Journal of Marketing Research, 48(SPL), S78–S90.

    Google Scholar 

  • Wilkinson, R. G., & Pickett, K. E. (2009). Income inequality and social dysfunction. Annual Review of Sociology, 35, 493–511.

    Google Scholar 

  • Williams, C. (2019). In consumer Debt Boom, many Americans are using credit cards to shop. Retrieved February 06, 2021, from https://morningconsult.com/2019/06/06/in-consumer-debt-boom-americans-are-using-credit-cards-to-shop/#:~:text=More%20credit%20card%20owners%20said,purchases%20than%20paying%20for%20necessities&text=55%25%20of%20Americans%20who%20own,spending%20is%20the%20biggest%20contributor.

  • Yang, H., & Zhang, K. (2021). How Resource Scarcity Influences the Preference for Counterhedonic Consumption. Journal of Consumer Research.

  • Yeh, S. C. J., Wang, W. C., Chou, H. C., & Chen, S. H. S. (2021, January). Private Long-Term Care Insurance Decision: The Role of Income, Risk Propensity, Personality, and Life Experience. In Healthcare (vol. 9, no. 1, p. 102). Multidisciplinary Digital Publishing Institute.

  • Yeung, M. C., Ramasamy, B., Chen, J., & Paliwoda, S. (2013). Customer satisfaction and consumer expenditure in selected European countries. International Journal of Research in Marketing, 30(4), 406–416.

    Google Scholar 

  • Yoon, S., & Kim, H. C. (2018). Feeling economically stuck: The effect of perceived economic mobility and socioeconomic status on variety seeking. Journal of Consumer Research, 44(5), 1141–1156.

    Google Scholar 

  • Zauberman, G., & Lynch, J. G., Jr. (2005). Resource slack and propensity to discount delayed investments of time versus money. Journal of Experimental Psychology: General, 134(1), 23–37.

    Google Scholar 

  • Zeelenberg, M., & Van Dijk, E. (1997). A reverse sunk cost effect in risky decision making: Sometimes we have too much invested to gamble. Journal of Economic Psychology, 18(6), 677–691.

    Google Scholar 

  • Zhou, R., & Pham, M. T. (2004). Promotion and prevention across mental accounts: When financial products dictate consumers& investment goals. Journal of Consumer Research, 31(1), 125–135.

    Google Scholar 

  • Zhu, M., & Ratner, R. K. (2015). Scarcity polarizes preferences: The impact on choice among multiple items in a product class. Journal of Marketing Research, 52(1), 13–26.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Marketing Department, Copenhagen Business School, Solbjerg Plads 3, 2000, Frederiksberg, Denmark

    Gülen Sarial‑Abi

  2. Leeds University Business School, University of Leeds, Maurice Keyworth Building, (LUBS G07), Leeds, UK

    Aulona Ulqinaku

  3. Marketing Department, University of Portsmouth, Richmond Building, PO13DE, Portmouth, UK

    Giampaolo Viglia

  4. Department of Economics and Political Science, University of Aosta Valley, Street Cappuccini 2, 11100, Aosta, Italy

    Giampaolo Viglia

  5. Department of Marketing, Indian Institute of Management Bangalore, Bannerghatta Road, Bangalore, 560075, India

    Gopal Das

Authors
  1. Gülen Sarial‑Abi
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Aulona Ulqinaku
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Giampaolo Viglia
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Gopal Das
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Gülen Sarial‑Abi.

Additional information

Publisher's note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

The original online version of this article was revised: the given and family names of Gülen Sarial-Abi were incorrectly structured.

Shailendra Jain served as Area Editor for this article.

Supplementary Information

Below is the link to the electronic supplementary material.

Supplementary file1 (DOCX 2320 KB)

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Sarial‑Abi, G., Ulqinaku, A., Viglia, G. et al. The effect of financial scarcity on discretionary spending, borrowing, and investing. J. of the Acad. Mark. Sci. 51, 1214–1243 (2023). https://doi.org/10.1007/s11747-021-00811-0

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11747-021-00811-0

Keywords

Search

Navigation