Giving Consumers License to Enjoy Luxury

Courtesy of Citizens of Humanity

Stimulating consumption has become a key ingredient in the global effort to revive economic growth. However, even many well-off consumers have been suffering from a “shopper’s block” since the financial crisis and economic downturn transformed consumers’ mind-sets — and in the process turned luxuries into socially discouraged opulence. According to an October 2009 article in The Wall Street Journal, shoppers have been suffering from “luxury shame” since the financial crisis changed “the guilty pleasure of shopping … to plain old guilt.” And that guilt, it seems, has been hurting sales — and thus damping consumption and economic recovery.

As they try to maneuver through times of guilt and austerity, marketers seek tactics that they hope will overcome consumers’ guilt and negative self-regard — and will as a result revive consumption. New research on consumer behavior suggests that an effective tactic can be to acknowledge consumers’ unconscious attempts to balance their self-image. Research has shown that people engage in compensatory behavior when their self-image deviates from its standard level. In other words, when a person’s self-image dips, the individual tries to compensate for this negative self-regard, by, for example, refraining from purchasing or consuming a guilty pleasure. If, on the other hand, a person’s self-image rises above its standard level, the individual is inclined to give in to behaviors that are otherwise associated with feelings of guilt. This is called “the licensing effect.” When individuals have had a chance to boost their self-image by, for example, a virtuous act, they are subsequently more likely to engage in self-indulgent consumption. In line with this notion, our research has found that making an altruistic decision, such as a donation to charity, helps establish a positive personal self-image that is likely to liberate the person subsequently to make self-indulgent choices. As a consequence of this so-called licensing effect, a consumer’s preference for relative luxuries — and their likelihood of choosing them — increases.

Our research on the licensing effect in consumer choice illustrates its significant implications for management and marketing. In one study, we asked participants to make a hypothetical choice between purchasing a relative necessity (a vacuum cleaner) or a relative luxury (designer jeans).