Research

When shopping, don’t let your emotions be your guide

Why do shoppers become such giddy, impulsive consumers at this time of year?

Black Friday is almost here, kicking off another frenzied holiday shopping season. Why do shoppers become such giddy, impulsive consumers at this time of year? To get the answer, The Well asked neuroeconomics expert Camelia Kuhnen, a finance professor at Kenan-Flagler Business School who studies how people make financial and economic choices.

Kuhnen: Responding to enticing ads and big sales, consumers can become more present-biased. They start feeling impatient, feel the need to make immediate purchases and might overvalue certain goods and buy them even though they don’t need them.

And these feelings are all in their heads. Excitement activates the primitive reward center in the brain called the nucleus accumbens. This activation causes shoppers to prefer immediate rewards and become more tolerant of financial risks, making them more apt to buy too much.

While more consumption is better for the economy in the short-run, the fact that some households do not save at all – and get into debt in part because of spending too much around the holiday season – could actually have negative long-run implications for those households.