MIT Study Confirms Pain of Paying Affects Spending Habits
“MIT research — Prelec & Simester, pain of paying / decoupling”
Summary
MIT scholars Prelec and Simester conducted research demonstrating that credit‑card payments reduce the “pain of paying” by decoupling the moment of consumption from the moment of payment, which leads consumers to spend more or show higher willingness to pay. This work builds on the earlier Prelec & Loewenstein (1998) findings and confirms the decoupling effect.
Sources 59 searched
- Why does mobile payment promote purchases? Revisiting the pain of paying, and understanding the implicit pleasure via selective attention - PMC
The “buy‐now‐pay‐now” nature of cash payment creates tight coupling, while the delayed payment of a credit card facilitates decoupling between consumption and payment, thus reducing the pain of paying when making decisions (Prelec & Loewenstein, 1998).
- When store credit cards hurt retailers: The differential effect of paying credit card dues on consumers' purchasing behavior - ScienceDirect
In a cautionary note to retailers, this research provides evidence that store (vs. bank) credit card users assign lower reservation prices for future purchases (study 1), show less total expenditure in shopping bags (study 2 and 3), and are less engaged in impulsive purchasing (study 2) at the card-issuing store. The authors provide evidence that even though store and bank credit cards result in a similar level of pain of paying and temporal decoupling, these previously assumed to be similar payment modes lead to different purchasing decisions.
- A replication study of the credit card effect on spending behavior and an extension to mobile payments - ScienceDirect
Moreover, prior studies have explored the mechanism underlying the effect of payment methods on spending behavior. One mechanism that has been given much attention is the pain of payment (Prelec and Loewenstein, 1998; Raghubir and Srivastava, 2008; Thomas et al., 2011).
- Pain of Paying
The pain of paying plays an important role in consumer self-regulation to keep spending in check (Prelec & Loewenstein, 1998). This pain is thought to be reduced in credit card purchases, because plastic is less tangible than cash, the depletion of resources (money) is less visible and payment ...
- © 2008 by the Board of Trustees of the University of Illinois The Recess Debate
© 2008 by the Board of Trustees of the University of Illinois · A Disjuncture between Educational Policy
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- Beware: The credit card premium - MSU Extension
While Simester and Prelec’s study ... willingness to pay more for an item when paying with a credit card, is the fact that there is no immediate pain associated with a credit card purchase....
- The red and the black: mental accounting of savings and debt
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- The Influence of Payment Method: Do Consumers Pay More with Mobile Payment? By
the literatures (Thaler 1985, 1999; Prelec and Loewenstein 1998), credit cards would delay · payment, separating the paying and purchasing time. This decoupling effect makes people
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