Other people's money: money's perceived purchasing power is smaller for others than for the self

Polman, E, Effron, D and Thomas, M (2018) Other people's money: money's perceived purchasing power is smaller for others than for the self. Journal of Consumer Research, 45 (1). pp. 109-125. ISSN 0093-5301 OPEN ACCESS

Abstract

Nine studies find that people believe their money has greater purchasing power than the same quantity of others’ money. Using a variety of products from socks to clocks to chocolates, we found that participants thought the same amount of money could buy more when it belonged to themselves versus others – a pattern that extended to undesirable products. Participants also believed their money – in the form of donations, taxes, fines, and fees – would help charities/governments more than others’ money. We tested six mechanisms based on psychological distance, the endowment effect, wishful thinking, better-than-average biases, pain-of-payment, and beliefs about product preferences. Only a psychological distance mechanism received support. Specifically, we found that the perceived purchasing power of other people’s money decreased logarithmically as others’ psychological distance from the self increased, consistent with psychological distance’s subadditive property. Further supporting a psychological distance mechanism, we found that framing one’s own money as distant (vs. near) reduced the self-other difference in perceived purchasing power. Our results suggest that beliefs about the value of money depend on who owns it, and we discuss implications for marketing, management, psychology, and economics.

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Item Type: Article
Subject Areas: Organisational Behaviour
Additional Information: © 2018 Journal of Consumer Research Inc. This is a pre-copyedited, author-produced PDF of an article accepted for publication in Journal of Consumer Research following peer review. The version of record, Evan Polman, Daniel A Effron, Meredith R Thomas; Other People’s Money: Money’s Perceived Purchasing Power Is Smaller for Others Than for the Self, Journal of Consumer Research, ucx119 is available online at: https://doi.org/10.1093/jcr/ucx119
Subjects: C > Cash management
P > Psychology
Date Deposited: 15 Dec 2017 11:59
Last Modified: 16 Jul 2019 16:44
URI: http://lbsresearch.london.edu/id/eprint/939
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