New NYU Stern Research Explains Why People Who Feel Poor Buy Products That Seem Scarce

NEW YORK--(BUSINESS WIRE)--Assistant Professor of Marketing Adam Alter and PhD student Eesha Sharma at NYU Stern reveal why people who feel financially constrained might be lured to purchase scarce or rare products—those that aren’t widely available to other people. The authors suggest that consumers who feel financially disadvantaged counteract feelings of financial deprivation by acquiring these scarce products, precisely because they seem unavailable to others. Although limited goods are generally more appealing than mass market products, the study shows that the desire for scarce items is particularly pronounced when customers feel financially disadvantaged.

“Our findings suggest a novel route along which deprived consumers unwittingly travel as they attempt to alleviate the discomfort that follows deprivation.”

Over the course of five studies, the authors examined the relationship between how financially comfortable consumers felt and their preference for scarce goods. The authors both measured and manipulated this sense of financial wellbeing, and found that consumers who felt financially deprived preferred scarce products. Specifically, those people:

• Detected which of two goods was more scarce in a series of visual scenarios with greater accuracy
• Chose scarce rather than abundant but otherwise similar goods (e.g., candy bars that varied in availability in a vending machine) with higher frequency
• Consumed a larger amount of goods that appeared to be scarce rather than abundant (e.g., M&Ms of two different colors, presented in different proportions in a cup)

“Our findings suggest a novel route along which deprived consumers unwittingly travel as they attempt to alleviate the discomfort that follows deprivation.” The authors also warn, “These findings further suggest that society’s poorest consumers are the most vulnerable to predatory marketing practices that capitalize on this foible. On a more positive note, this study may provide insights to policymakers who want to increase the frequency of beneficial behaviors, such as consuming healthy foods, participating in physical exercise and adopting long-term savings plans.”

To read the full paper, titled, "Financial Deprivation Prompts Consumers to Seek Scarce Goods" and forthcoming in the Journal of Consumer Research, visit:
http://web-docs.stern.nyu.edu/pa/sharma_alter_2011.pdf

To speak with Professor Adam Alter, please contact him directly at 212-998-0142, [e-mail]; or contact Carolyn Ritter in NYU Stern’s Office of Public Affairs, 212-998-0624, [e-mail].