Behavioral Economics Tips for your Holiday Shopping
And just like that we’re now in the last month of the year - the Christmas season, when traffic is at its worst and spending is at its peak!
With the longest Christmas season in the world, Filipinos would probably rank high if we plot spending as a function of income during this time of the year. What more, Pinoys have long Christmas gift lists that could rival that of Santa’s!
I’m sure you’ve heard of the usual holiday shopping tips such as:
1. Make a list.
2. Group the recipients and have a budget for each group.
3. Start shopping early.
4. Go to Divisoria and enjoy deep discounts.
5. Better yet, give something that you can make.
Of course the above are still very useful and I hope you can still do them. I even suggest that your list be in an excel file which you can update every year. This way, you have a record of what you have given the recipient year after year. It would really be nice if you have the luxury of time to make your own gifts, or shop early, or have the energy to go to Divisoria.
However, the reality is that a lot of us end up squeezing our Christmas shopping in our busy schedules. A lot of times we go beyond our budget due to lack of planning, time and the proper disposition conducive to making rational decisions. This is the reason why instead of enumerating the usual holiday shopping tips, I’m going to share with you tips that I gathered from different Behavioral Economics (B.E.) theories. (Behavioral Economics is a field of study that highlights the effects of psychological, social and emotional aspects in the actual consumer behavior as opposed to Traditional Economics, which assumes that the consumer is always rational.) Here they are:
1. Have a shopping plan. Treat it like a mission with time, strategy and end goal all listed down. Choose your shopping venue well to avoid driving from one place to another. Time is a valuable resource.
2. Sleep well, eat well. Have a restful sleep at night, then have a good breakfast taken at a strategic time (not too early so as not to be hungry after only an hour of shopping). It has been established in B.E. studies that we tend to make irrational decisions when we’re in a “depleted state” (i.e. hungry, angry, etc.)
3. Leave the credit card. If you’re not yet disciplined with the use of your mighty plastic, don’t bring it. The pain of departing with cash is so much greater than signing those charge slips. What more, shopping with cash automatically puts a stop when the budget is reached.
4. Self-affirmations before shopping. Studies show that when we remind ourselves of our positive traits before we go shopping, we tend to shop less. This, my friend, is the very basis of retail therapy. Someone who feels terrible would need more stuff to feel better about herself. The only problem with this therapy is that it seems to be the opposite of the meaning of the word therapy (treatment). At best, it’s a palliative. But of course, retailers don’t want to use that word.
5. Dress up well. We always hear the advice to shop in comfy clothes but please don’t overdo it. You still have to look good (comfortably so). Why? Salespeople are only human and they have a tendency to treat well-dressed customers well and do the opposite to those who are not. I know a story of someone who was not treated well by the saleslady because she wasn’t properly dressed. To show her financial capability, she exaggerated her purchases on that day. So we see two irrational behaviors at work here. Unfortunately, the cost was carried by the customer.
6. Schedule a break. Hungry stomachs and tired feet make irrational decisions.
7. Shop alone. We are affected by our companion such that when she starts buying stuff that’s not within our budget, we might do the same. There’s also pressure to make the purchase right away if someone’s waiting for us.
8. Stick to the plan. Detours will most probably increase your purchases, or at the very least, waste your time.
9. Buy the less expensive items first. There is a B.E. principle called anchoring, which is the human tendency to use the number first suggested to us as a basis or anchor. So if we’ve already made a big-ticket purchase at the start, chances are, it would be easier for us to purchase higher-priced goods after.
10. Record your purchases. Once you get home or as soon as practicable, update our excel file and input the items you purchased together with prices and tick off the items done. It will give you a sense of accomplishment. If you’re not yet done, plan your next trip and follow the 10 items all over again.
Holiday gift giving can be a source of stress. Billions of hard earned cash seem to be put in oftentimes “useless” gifts that we both give and receive. This is why some have made a stand to boycott the Christmas gift giving frenzy. But if you feel that it’s a tradition worth continuing, just make the best to enjoy it. Remember Christmas gift giving is not really an economic exercise. It’s not all about the utility of the gifts, but it’s really a social exercise. We belong to a society that observes certain norms of behavior. It’s a cliché because it’s true: In the end, it’s really the thought that counts.
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ANNOUNCEMENTS
I will speak at the Manila Children’s Festival on December 12, 2015 at the SM Megamall, Mandaluyong City.
Rose Fres Fausto is the author of bestselling books Raising Pinoy Boys and The Retelling of The Richest Man in Babylon (English and Filipino versions). Click this link to read samples - Books of FQ Mom Rose Fres Fausto. She is the grand prize winner of the first Sinag Financial Literacy Digital Journalism Awards. Follow her on Facebook and You Tube as FQ Mom, and Twitter & Instagram as theFQMom.
ATTRIBUTIONS: Photos from money.usnews.com, onceuponatimeabc.com, blog.taskrabbit.com, spa-london.org, idiva.com, dailyfinance.com, s-media-cache-ak0.pinmg.com, stylenews.peoplestylewatch.com, self.com, hercampus.com, smithakalluraya.com, townnewstoday.com, talk-bubble-md.com, fcrca.com, nimbleuser.com
This article is also published in FQMom.com and RaisingPinoyBoys.com.
