Misery: The Cause of the Economic Recession?

A 2009 New York Times article described how before the economic recession people would not hesitate to enjoy a “momentary pleasure–$4 lattes…lip gloss, [or] mints”, for example. Presently people have to go without those pleasures due to economic factors. A rather simple traditional explanation for the economic recession is that people were perhaps having too much fun buying, borrowing, selling etc. When describing the pre-economic recession behavior the emphasis is usually on the emotion of enjoyment that drives the behavior. Now, during the recession people are described as fearful and will spend less, which is expected since there is a degree of uncertainty, the reporter writes.

An alternative explanation is that a collective sense of misery or sadness and being self-focused caused individuals to spend more leading to the present economic recession. In fact, in a laboratory experiment individuals who were primed with sadness and self-focus tended to sell items at a lower price and buy at a higher price (Cryder et al., 2008; Lerner et al., 2004).  Researchers argued that participants, feeling down, wanted to enhance the way they felt and as a result gave a higher value to the object purchased. For the opposite effect, Lerner et al., (2004) primed participants with disgust that resulted in the willingness to pay less for the item and lowering the selling price. The results were explained as participants wanting to rid themselves of “anything new”, which may explain the present economic recession. Of course, the findings have limited ecological validity and the generalization may be slightly simplistic.  However it is not farfetched to conclude, as newspaper articles do, that specific emotions motivate us to act.

Read more: The reluctance to spend more may be legacy of recession.

Lerner, J.S., Small, D.A., & Loewenstein, G. (2004). Heart strings and purse strings: Carryover effect of emotion on economic decisions.

Cryder, C. E., Lerner, J.S., Gross, J.J., & Dahl, R.E. (2008). Misery is not miserly: Sad and self-focused individuals spend more.

add to del.icio.us add to blinkslist add to furl digg this add to ma.gnolia stumble it! add to simpy seed the vine add to reddit add to fark tailrank this post to facebook

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s