It is no surprise that people
tend to be frugal when making purchases for themselves. They look for good deals and generally want
to minimize the cost of the things that they buy.
But what about when buying things
for other people?
This question was explored in a
fascinating paper in the September, 2014 issue of the Journal of Personality and Social Psychology by Minah Jung,
Leif Nelson, Ayelet Gneezy and Uri Gneezy.
First, in a series of field
studies, they compared two conditions:
Pay What You Want and Pay It Forward.
In Pay What You Want, people get to decide how much they want to pay for
something. In Pay It Forward, people are
told that someone else has paid for them, and they have the opportunity to pay
what they want for the next person.
Three studies looked at entry
into a museum. That museum (the Cartoon
Art Museum in San Francisco) has a Pay What You Want day each week. People attending the museum were randomly
assigned to be told that they could pay what they wanted or that a previous
person had paid for them and they had the option to pay what they wanted for
another visitor. In each of these studies,
participants paid about 30% more when paying for someone else than when paying
for themselves. A fourth field study
involved people buying coffee at a farmer’s market. Participants paid about 20% more when making a
purchase for someone else than when making a purchase for themselves.
Why does this happen?
The researchers performed a
series of laboratory experiments to explore this possibility. One study allowed some participants to meet
the next participant before the study.
During the study, participants were given $10 for participating and then
were given a coffee mug. Some
participants were told to pay what they wanted for the mug. Others were told that their mug had been paid
for and they could pay what they wanted for the next participant. As in the field studies, participants paid more
when they were paying for someone else (about $2.00) than when paying for
themselves (about $1.50). Meeting the
other participant, though, had no impact on how much they were willing to pay.
In this study, participants were
also asked how much they thought other people paid for the mug. Interestingly,
participants estimated that other people paid more for the mug than they were
willing to pay for it themselves.
This finding suggests that people
are overestimating how much other people pay for things, and that is
influencing what they spend when paying for someone else. To test this possibility, another study gave
people information about how much other people paid for the mug. Some people were told the previous
participant paid 50 cents. Others were
told that the previous participant paid $2.50.
A control condition was given no information.
In this study, participants in
the control condition showed the same effect as before. They paid more when paying for someone else
than when paying for themselves. When
given information about what other people paid, though, the difference in
conditions disappeared. People who were
told that the previous participant paid a small amount were willing to pay less
than those who were told that the previous participant paid a lot. But, there was no longer a difference between
paying for yourself and paying for someone else.
This work suggests that people
adopt different ways of thinking about prices when paying for themselves and
when paying for others. When paying for
themselves, people want to get a good deal. That means that they want to pay
something, but generally less than what they think other people are
paying. When buying for someone else,
though, people give more weight to their beliefs about what other people pay
for things. In order to be seen as
generous, people want to feel like they are adhering to a norm.
An interesting aspect of this
work is that people do pay something when given the option to pay whatever they
want. People have the option in all of
these studies (including the field studies) to take something for free. And they do not do that. There is an inherent sense of fairness that
leads people to want to pay something for goods that they take, even though
they want to feel like they get a good value for their money.
One reason why people want to pay
something for what they get is that there is a broad social contract involved
in transactions. People assume that if
they start taking things for free that eventually everyone will try to get
something for nothing. And that means
that their own efforts will not be valued in the future.
