A new study conducted in part by Johnson Graduate School of Management Professor Manoj Thomas finds that paying with cash is painful and therefore can prevent impulsive food purchases, while credit card payments are painless and foster unhealthy food choices.Some food items, labeled “vice items” in the study, are commonly-known unhealthy food products that tend to elicit impulsive consumer responses. The pain associated with paying in cash versus a credit card or debit card can moderate these spontaneous urges to purchase vice items.This research comes in light of two observations. First, 34 percent of U.S. adults are obese — a 12-percent rise over the past 22 years from 23 percent of U.S. adults who were obese in 1988. In addition to the obese population, 33 percent of U.S. adults are overweight. Second, credit and debit cards are replacing cash in the consumer market. In 2006, about 40 percent of purchases in the U.S. were made via a credit or debit card. Also, the average American has 4.4 cards in his or her wallet at a given time.“I do research on pricing,” Thomas said. “The issue is to understand how mode of payment contributes to consumers’ responses.”Credit card and debit card payments have little to no pain associated with them, according to the study. This lack of pain weakens impulse control. Therefore, consumers are more likely to buy unhealthy food products when they pay by credit or debit card — even though debit cards are essentially the same as cash in terms of spending — than when they pay in cash.“Debit cards and cash are the same,” said Thomas. “Why is it that debit cards are seen as similar to credit cards in terms of spending? What is the psychology behind that?”These questions will motivate future research done on the topic of how credit and debit card payments influence consumers’ food choices and how this may contribute to the increasing trend in obesity.The study, titled “How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation of Vices” was conducted by Thomas, Kalpesh Kaushik Desai of SUNY Binghamton and Satheeshkumar Seenivasan of SUNY Buffalo. The research paper will be published in the Journal of Consumer Research in June 2011.Part of the study, concerning the amount of impulsive food purchases associated with credit or debit card spending, was conducted with a random population of 1,000 consumers.“The study was from a very general population,” Thomas said. “We are not studying people in a lab. We are studying real consumers and actual behavior.”
Original Author: Rachel Rabinowitz