Why You Make Expensive Purchases

How Spending Money Increases Feelings of Power

Mar 31, 2009

Feeling powerless is a psychological threat that can lead to expensive purchases. Here's why spending money increases power, plus three steps to stopping the debt cycle.

Have you ever wondered why you - or your partner - keep making expensive purchases? It’s because spending money increases feelings of power. Feeling powerless may help explain why so many of us struggle to pay off credit card debt, make mortgage payments, and invest for retirement.

The Psychological Threat of Powerlessness

Researchers Derek D. Rucker and Adam D. Galinsky of Kellogg School of Management at Northwestern University asked research subjects to recall times when someone else had power over them.

While remembering these feelings of powerlessness, the participants were willing to pay higher prices for status-symbol items.

"The increased willingness to pay for status-related objects stems from the belief that obtaining such objects will indeed restore a lost sense of power," write Rucker and Galinsky.

Many consumers believe that spending money on expensive purchases will decrease their feelings of powerlessness.

Why You Make Expensive Purchases

Here's how these researchers explain the concept of spending money and the psychological threat of powerlessness:

"As an analogy, consider two individuals, one a successful millionaire and the other a recently demoted banker," wrote the researchers, adding, "Both might view a Rolex watch as a clear status symbol. However for the millionaire, wearing the watch might not make the millionaire feel any more powerful than he/she normally feels. In contrast, for our demoted banker, wearing the same watch might make the banker feel significantly more powerful."

How Spending Money Increase Feelings of Power

"It suggests that in contemporary America, people use consumer purchases to compensate for psychological states of insecurity," say Rucker and Galinsky. "Spending beyond one's means in obtaining status-related items is a costly coping strategy for dealing with psychological threats such as feeling powerless."

Making expensive purchases to increase feelings of power may become a devastating cycle – which could be why so many Americans are struggling to pay off credit card debt, make mortgage payments, and invest for retirement. The more in debt one gets, the less powerful he feels and this could lead one to spend even more money.

Three Steps to Stopping the Debt Cycle

Knowing about the psychological threat of powerlessness is the first step in stopping the cycle of debt. The second step is to pay off your debt; the third step is to find other ways to increase your feelings of power.

Spending money and struggling with debt is about an unbalanced power differential in your life, and the sooner you find balance, the happier (and wealthier) you'll be!

The copyright of the article Why You Make Expensive Purchases in Psychology is owned by Laurie Pawlik-Kienlen. Permission to republish Why You Make Expensive Purchases in print or online must be granted by the author in writing.