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Explanations of effects of prior income changes on buying decisions

[journal article]

Karlsson, Niklas; Gärling, Tommy; Selart, Marcus

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Abstract Two experiments with undergraduates as subjects tested explanations of how a prior temporary income change influences choices between buying and deferred buying. In Experiment 1 predictions from the behavioral life-cycle theory (Shefrin & Thaler, 1988), the renewable resources model (Linville & Fischer, 1991) and the loss-sensitivity principle (Garling & Romanus, 1997) were contrasted. The results are inconsistent with the latter two explanations since the framing of buying as positive (buying a new model of a product) or negative (replacing a broken product) did not interact with the income change. Congruent with the behavioral life-cycle theory, willingness to buy was greater when subjects received a temporary income increase than when they received a temporary income decrease although total assets were equal. Further support for the behavioral life-cycle theory is obtained in Experiment 2 where four income-change conditions and durable and nondurable goods are compared.
Keywords consumption behavior; buying behavior; decision making; income; savings
Classification Applied Psychology; Sociology of Economics
Document language English
Publication Year 1999
Page/Pages p. 449-463
Journal Journal of Economic Psychology, 20 (1999) 4
DOI http://dx.doi.org/10.1016/S0167-4870(99)00017-3
ISSN 0167-4870
Status Published Version; peer reviewed
Licence Creative Commons - Attribution-ShareAlike