After eating in a restaurant you are told that the bill has been paid as a gift from a previous customer. Do you walk out or do you pay-it-forward (PIF) by paying for dinner to benefit another diner? Psychology Today blogs research has found that people generally model themselves on what others do (or what they think others do), and in this type of scenario tend to not only pay-it-forward but overpay. Motivation may be fear or simply a sense of generosity, the blogs concludes.
The power to save
People may be inclined to put more money into their saving when they feel powerful according to a new study in the Journal of Consumer Research, blogs the University of Chicago Press. The blog cites a study in which some participants were encouraged to feel powerful by sitting in a tall chair and others encouraged to feel powerless by sitting on a low ottoman. Given the option to either collect their compensation in cash or to put it in a lab savings account, ”powerful” participants saved more of their money than “powerless” participants.
Don’t break that EUR20
If you are someone who is prone to impulse purchases you may be able to trick yourself into being more thoughtful with your money by paying only in cash. This is one of a series of helpful tips by some well-known behavioural economists on a blog in The Week on how to banish bad money habits. Another useful tip from academic and author Hersh Shefrin is to avoid keeping small denominations of notes in your wallet or purse, as research says people tend to be less likely to spend money when using a larger denomination.