Stephanie M. Tully

The Role of the Beneficiary in Willingness to Pay for Socially Responsible Products: A Meta-Analysis

Many companies have made significant investments in socially responsible production practices for their products. Environmentally safe cleaning products, fair trade coffee, and sustainable seafood are just a few examples. In this paper, we conduct a meta-analysis of over 80 published and unpublished research papers across a large number of product categories to better understand differences in willingness to pay (WTP) for socially responsible products. In particular, we are interested in whether the beneficiary of the social responsibility program—humans, animals, or the environment—affects WTP. We use two dependent variables: the percentage premium people are willing to pay and the proportion of respondents who are willing to pay a positive premium. We find that the mean percentage premium is 16.8 percent and that, on average, 60 percent of respondents are willing to pay a positive premium. Importantly, across both dependent measures, we find that WTP is greater for products where the socially responsible element benefits humans (e.g., labor practices) compared to those that benefit the environment. Implications for retailers, manufacturers, and future research are discussed.

Seeking Lasting Enjoyment with Limited Money: Financial Constraints Increase Preference for Material Goods over Experiences

Consumers with limited discretionary money face important trade-offs when deciding how to spend it. In the current research, we suggest that feelings of financial constraint increase consumers’ concern about the lasting utility of their purchases, which in turn increases their preference for material goods over experiences. The results of seven studies confirm that the consideration of financial constraints shifts consumers’ preferences toward material goods (rather than experiences), and that this systematic shift is due to an increased concern about the longevity of the purchase. This preference shift persists even when the material goods are more frivolous than the experiences, indicating that the effect is not driven by an increased desire for sensible and justifiable purchases. However, the shift toward material purchases disappears when the material good is unusually short lived, further implicating concern about longevity as the key driver of the effect. Finally, the consideration of financial constraints increases preference for material purchases even when the potential memories that experiences can provide are made explicitly salient. Together, these results indicate that financially constrained consumers spend their discretionary money on material purchases as a means of securing long-term consumption utility.

Questioning the End Effect: Endings Are Not Inherently Over-Weighted in Retrospective Evaluations of Experiences

The present research re-examines one of the most basic findings regarding the evaluation of hedonic experiences: the end effect. The end effect suggests that people’s retrospective evaluations of an experience are disproportionately influenced by the final moments of the experience. The findings in this paper indicate that endings are not inherently over-weighted in retrospective evaluations. That is, episodes do not disproportionately affect the evaluation of an experience simply because they occur at the end. We replicate prior demonstrations of the end effect, but provide additional evidence implicating other processes as driving factors of those findings.

Forgetting to Remember Our Experiences: People Overestimate How Much They Will Retrospect About Personal Events

People value experiences in part because of the memories they create. Yet, we find that people systematically overestimate how much they will retrospect about their experiences. This overestimation results from people focusing on their desire to retrospect about experiences, while failing to consider the experience’s limited enduring accessibility in memory. Consistent with this view, we find that desirability is a stronger predictor of forecasted retrospection than it is of reported retrospection, resulting in greater overestimation when the desirability of retrospection is higher. Importantly the desire to retrospect does not change over time. Instead, past experiences become less top-of-mind over time and, as a result, people simply forget to remember. In line with this account, our results show that obtaining physical reminders of an experience reduces the overestimation of retrospection by increasing how much people retrospect, bringing their realized retrospection more in line with their forecasts (and aspirations). We further observe that the extent to which reported retrospection falls short of forecasted retrospection reliably predicts declining satisfaction with an experience over time. Despite this potential negative consequence of retrospection falling short of expectations, we suggest that the initial overestimation itself may in fact be adaptive. This possibility and other potential implications of this work are discussed.

Discretionary Debt Decisions: Consumer Willingness to Borrow for Experiences and Material Goods

Previous work suggests consumers consider a purchase’s longevity (i.e., how long purchases last) when making debt decisions. This work shows that consumers prefer using debt to pay for longer-lasting purchases so that they continue to receive benefits from the purchase as they pay for it. The current research finds an opposite pattern. Consumers are more willing to borrow for experiences than for material goods, even though experiences do not last as long. Since consumers typically borrow when current funds are unavailable, deciding not to borrow results in foregoing the purchase in the present. Given this consequence, we suggest that purchase-timing importance is a stronger driver than the purchase’s longevity in most borrowing decisions. Using archival data and seven studies, we show that consumers are more willing to borrow for experiences than for material goods. This effect is explained by greater purchase-timing importance for experiences rather than other differences between experiences and material goods. We reconcile the apparent contradiction between the predictions in the previous and current research by examining the relative impact of purchase-timing importance and purchase longevity in different borrowing contexts.