When we buy a product that exhausts our remaining budget, the negative emotions associated with parting with money are transferred onto the product, thereby influencing its ratings.
In a recent study on the Bottom Dollar Effect, people were asked to purchase 3 online movies using assigned credits, with each movie costing 10 credits. Some people were given a budget of 30 credits, while others were given 50 credits. Essentially, those with the 30 credit budget would be exhausted by the third movie while the 50 credit people wouldn’t be. What could possibly happen as a result?? Well, let’s find out…
So, after purchasing and watching each film, both groups were asked to rate them. Fascinatingly, it was found that the people who’d exhausted their budget by the third film were less satisfied with it, compared to those whose budget hadn’t run out.
Going further, a follow up study found that this effect was even more pronounced amongst people who had earnings difficulties. They also found that the effect was heightened when consumers weren’t told when their budget would be replenished. However, such ill-effects disappeared when they were told their budgets would be replenished immediately (i.e. they would receive $60 tomorrow).
This research is based on earlier findings that we essentially chunk our money into mental accounts (e.g. Thaler, 1985). For example, we may treat our salary as being different from a monthly bonus. Additionally, we humans also find parting with money to be psychologically-painful (e.g. Prelec and Loewenstein 1998), and this is said to be affected by changes in our remaining budget. Buying something when our budget balance is relatively low is likely to be more painful than when our remaining budget is high. As shown by the curiously-named Bottom Dollar Effect, this payment pain (painment anyone?) can greatly influence the satisfaction and assessment of consumer purchases.
Toward a Positive Theory of Consumer Choice PDF (Thaler, 1980)
The Red and the Black: Mental Accounting of Savings and Debt PDF (Prelec, Drazen, and Loewenstein, 1998)