Consumer and Economic Psychology
Lecture 1 – Introduc.on
® Segmenta(on can be helpful in defining target audiences. There are different points that
people can be segmented on.
Geographics: your loca*on ma-ers
Demographic: gender, income, age
Behavioral: tracking what people do,
what they click on
Psychometric: underlying
mo*va*on, why people do things
® Consumer and economic psychology consists of the interac9on between goods and
services, people (emo(ons, values, cogni(ons, preferences), and economy. Both
domains relate and intertwine with each other.
Consumer and economic psychology
Goods and Services People Economy
Consumer psychology employs Economic psychology promotes and
theore*cal psychological discusses research, as well as policy
approaches to understanding making, on the interface of
consumers psychology and economics
Consumer psychology can focus on:
® Product adop(on (changing a product to meet the need of customers in a market other
than the one on which is was made ® started at the industrial revolu9on)
o Compe99on
o Assis9ng consumers
o Adver9sement
o ADen9on, memory
o Applica9on (WWII, Nokia making its phones dust resistant for the Indian market)
® Impacts on people
o James (1890): ‘the things you have basically define who you are’ ®
self-image, certain products have certain traits related to them.
o Coca Cola: what kind of consequences have products on people? What
kind of role plays the government?
, ® Product use
o More effec9ve/sustainable use
Economic psychology can focus on:
® Decision making
o (ir)ra9onal
o Value, u9lity
o Risk, uncertainty
® How this makes people feel
® How this affects the economy
® Consumer sen(ment index (an economic indicator which measures the degree of
op9mism that consumers feel about the overall state of the economy and their personal
financial situa9on)
® It is not all about money: there are certain values and comprehensive
wellness that money cannot indicate.
® Not all economic choices are ra9onal: people make use of heuris(cs and
biases.
Lecture 2a – The prosocial consumer
® Prosocial behavior: the inten9on to help other people through (financial) self-sacrifice to
gain something for other people or the society as a whole.
® Altruism means ac9ng in the best interest of others rather than in one’s own self-
interest. Pure altruism states that prosocial behavior does not cause gain any benefit for
the consumer.
® What mo9vates people to engage in
It makes a statement about me
prosocial behavior?
o Self-interested mo(ves I really want people to know that I
Some9mes, it is directly beneficial to do care about the environment
so. Most of the 9me, the benefits are indirect, such as reputa(on.
Costly signaling theory: handicap principle ® expensive, arbitrary, or
wasteful behavior are designed to convey informa9on benefi9ng signalers.
o Hedonic benefits
Warm-glow giving is an economic theory describing the emo9onal reward of giving to
others. People are choosing to ‘do their part’ and the warm glow represents the
pleasure derived from "doing good", regardless of the actual impact.
® AHtude-(prosocial)behavior gap in ethical consump9on:
Lecture 1 – Introduc.on
® Segmenta(on can be helpful in defining target audiences. There are different points that
people can be segmented on.
Geographics: your loca*on ma-ers
Demographic: gender, income, age
Behavioral: tracking what people do,
what they click on
Psychometric: underlying
mo*va*on, why people do things
® Consumer and economic psychology consists of the interac9on between goods and
services, people (emo(ons, values, cogni(ons, preferences), and economy. Both
domains relate and intertwine with each other.
Consumer and economic psychology
Goods and Services People Economy
Consumer psychology employs Economic psychology promotes and
theore*cal psychological discusses research, as well as policy
approaches to understanding making, on the interface of
consumers psychology and economics
Consumer psychology can focus on:
® Product adop(on (changing a product to meet the need of customers in a market other
than the one on which is was made ® started at the industrial revolu9on)
o Compe99on
o Assis9ng consumers
o Adver9sement
o ADen9on, memory
o Applica9on (WWII, Nokia making its phones dust resistant for the Indian market)
® Impacts on people
o James (1890): ‘the things you have basically define who you are’ ®
self-image, certain products have certain traits related to them.
o Coca Cola: what kind of consequences have products on people? What
kind of role plays the government?
, ® Product use
o More effec9ve/sustainable use
Economic psychology can focus on:
® Decision making
o (ir)ra9onal
o Value, u9lity
o Risk, uncertainty
® How this makes people feel
® How this affects the economy
® Consumer sen(ment index (an economic indicator which measures the degree of
op9mism that consumers feel about the overall state of the economy and their personal
financial situa9on)
® It is not all about money: there are certain values and comprehensive
wellness that money cannot indicate.
® Not all economic choices are ra9onal: people make use of heuris(cs and
biases.
Lecture 2a – The prosocial consumer
® Prosocial behavior: the inten9on to help other people through (financial) self-sacrifice to
gain something for other people or the society as a whole.
® Altruism means ac9ng in the best interest of others rather than in one’s own self-
interest. Pure altruism states that prosocial behavior does not cause gain any benefit for
the consumer.
® What mo9vates people to engage in
It makes a statement about me
prosocial behavior?
o Self-interested mo(ves I really want people to know that I
Some9mes, it is directly beneficial to do care about the environment
so. Most of the 9me, the benefits are indirect, such as reputa(on.
Costly signaling theory: handicap principle ® expensive, arbitrary, or
wasteful behavior are designed to convey informa9on benefi9ng signalers.
o Hedonic benefits
Warm-glow giving is an economic theory describing the emo9onal reward of giving to
others. People are choosing to ‘do their part’ and the warm glow represents the
pleasure derived from "doing good", regardless of the actual impact.
® AHtude-(prosocial)behavior gap in ethical consump9on:
