THE PSYCHOLOGY BEHIND SPENDING BIG

“What drives people to spend thousands on products and experiences that could cost far less? Tiffanie Wen investigates.”  

By: Tiffanie Wen

Published: BBC, 9 October 2017, http://www.bbc.com/capital/story/20171006-the-psychology-behind-spending-big

Level of difficulty: **

BEFORE YOU READ

·         Economics: Conspicuous Consumption https://www.youtube.com/watch?v=-I4xx5ZaWaM

·         Conspicuous Consumption - Carissa Explains It All #GOMLpodcast https://www.youtube.com/watch?v=Y9zbQwv0WNY

QUESTIONS

1.       What surprising revelation is made concerning expensive products in the first paragraph?

2.       What conclusion can be drawn from the experiment involving wine and the one involving painkillers?

3.       What was the purpose of the MRI scans in the same experiments? To see if the subjects actually considered the expensive wine or pill to be good / better / best / worse.

4.       What mistaken belief leads buyers to splash out on more expensive alternatives?

5.       Read the example of the film. Why do people tend to make the choice they do?

6.       We understand from the text that people go for more expensive brands because…

7.       Watch the following video: https://www.youtube.com/watch?v=L1lnYyJ_d6w Why did Daniel Radcliff, Mike Tyson, Nicolas Cage, Beyoncé, Lady Gaga, Angelina Jolie, make the purchases they did? Because by doing so…

8.       What general reason is given for the desire to splash experienced by people in all walks of life?

9.       Watch the following video: https://www.youtube.com/watch?v=4oczSB5J2b4 . Why do people buy these goods?

10.   Is the trend mentioned in the previous question still valid today? Why?

11.   Read the conclusion. People mistakenly assume that spending big will ensure happiness but they are wrong because…. The best alternative is ….

WRITING TASK

Use all the information you have gleaned to write about the reasons for spending big.

THE PSYCHOLOGY BEHIND SPENDING BIG KEY AND TEACHERS’ NOTES

In this age of consumerism where positional goods are the order of the day, analyzing the underlying reasons for splashing out should be interesting. The students will probably be able to predict a lot of what is in the text and perhaps supply some additional reasons. It should lead to an interesting writing task.

1.       People rate them more highly and enjoy them more

2.       Price matters so much to our understanding of value that we sometimes rate pricey things…

3.       Better

4.       If an item is twice as expensive it is twice as good

5.       They are trying to get to that totally amazing experience even at the risk of getting a truly bad one (We are motivated to splurge because we’re seeking peak experiences won’t fit because ticket prices are the same for all films)

6.       There is an extra boost when you go up in the quality of experiences

7.       They obtain a sense of accomplishment and progress, and enhance their self worth

8.       To build the experiential cv

9.       To signal they are successful.

10.   No it isn’t. Because the deluge of material goods means that they are not as rare or scarce or luxurious as in the past.

11.   Splurging on items for ourselves is finite and doesn’t add up to increases of happiness over time;  giving to others