The psychology of spending money in Alabama
So, what did you buy during the 4th of July holiday? It might have been a vacation or stuff for the backyard barbecue. The latest U.S. Bureau of Economic Analysis report confirms Americans are spending less on durable goods like cars and more on services like air travel and hotels. This, even while some grocery prices continue to be stubbornly high. So, what gives? APR goes takes us all the way back to Mardi Gras in the Mobile to explain the psychology behind spending money…
Mardi Gras is long in the rearview mirror. But Fairhope’s Order of Mystic Magnolias parade offered the perfect symbol for consumer’s head scratching spending habits despite record high prices. A giant Paper Mache float featuring Rich Uncle Penny Bags, better known as Mr. Monopoly, rolled through the streets in February. Doubloons, hoola hoops, and moon pies rained down on the crowd.
“I have an idea of what I need to buy and I assure you I walk out with at least twice as much because I see something that’s like oh you know this will be so fun to throw to the kids or oh look my rubber chickens are back,” said Eastern Shore Chamber of Commerce president and CEO Casey Williams, who is also a member of a Mardi Gras Society. She knows the irony of counting her pennies at the grocery store
“So I itemize make that list so I don’t just go rogue on everything and look in my kitchen for what I already have,” she said.
While at the same time impulsively buying rubber chickens to throw to the crowd.
“I’m not gonna have another opportunity to do this in a quarter or even in six months. And by the time you get through to next year, you’re ready to go again,” said Williams
Fairhope clinical psychologist Dr. Lacy Kantra, whose office happens to be on the parade route, says our brains thinks differently about money when it comes to spending on experiences.
“Yes, spending makes us happy, you know we think of like retail therapy and things like that but I think that more than that, especially with Mardi gras it’s about that sense of like belonging and feeling like I belong to this organization, I’m part of this club, I get to give to people, I get to make people happy, I get to feel this sense of acceptance from other people,” observed Kantra.
Kantra says that psychology also applies to spectators, like Auburn student Laura Thompson an intern at the Opelika Sportsplex Adult activity center. She came to Mardi Gras as a chaperone of sorts with a bus load of seniors.
“We went to Toomies and I got this boa. I got some tinsel. This jacket was actually left over from one of the other years but I also got this hat and then a bunch of other . Oh, we got some tattoos and stuff like that too.”
Here’s Lacy Kantra…
”It’s the same reason that like people will go to concerts and spend $30 on the t-shirt or spend $10 on a beer because you’re like I’m here. This is what we do. This is part of this, you know, this is how I belong,” she said.
Kantra says this happy kind of spending signals a different message than the mundane trip to the super market each week - where rising food prices can activate the brain’s amygdala – the part of the brain that acts as sort of the “uh oh” center.
“In paying for groceries you’re adding in the extra piece that kind of alarms people. Like, oh, this is more than it was last year or last month,” said Kantra. “You know, what does that mean about society in that like it feels scary so you’re activating kind of a fear.”
Will this spending on fun give consumers something of a financial hangover?
“What you’re doing in that situation is instead of having that immediate response like you do at the grocery story of the amygdala fight or flight it’s kind of afterwards like, oh no is this unsustainable is this happing,” said Kantra.
We’ll find out what that looks like when the bills come in.