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Conspicuous consumption: Is it OK?

Two women on a road trip

Please spend if you can. Travel to the regions and do all the things they are famous for. Get on a plane, jump in the car. Do it for the team of 5 million.

In a nutshell

  1. Kiwis are being asked to start spending and travelling again to support the economy. But, aren't we also supposed to be behaving sustainably? And isn't saving, not spending, more prudent right now?
  2. We're faced with conflicting ideas - the push to help recovery through spending has us spinning with indecision around what is the right thing to do.
  3. How should companies to talk to people to reduce this cognitive dissonance? There are three key ways people resolve the dissonance - start there.

It's a thank you and a pay back for the deep pain we suffered for the collective good. Do your bit to get the economy moving again.

But aren’t we supposed to be backing off adding to carbon emissions? Don’t we already have too much stuff? Isn’t the sustainability movement asking us to think twice before adding to the sum of things that deplete natural resources and create disposability problems. 

There are also issues around moral norms as regards conspicuously spending that cause cognitive dissonance. When the media is reporting job losses, providing information about levels of unemployment payments, and featuring stories about people who are falling between the cracks in the system, how good does that make you feel about spending big on a night out or a weekend away at a luxury resort. Or just make you wonder if saving not spending would be prudent.

Our overtired brains have segued from the cognitive overload that the loss of habits and routines caused during lockdown to cognitive dissonance. It’s called cognitive dissonance when we are faced with conflicting ideas and things don’t seem to fit together well. And, the push to help the recovery through spending, has us spinning with indecision about what is the right thing to do.

There are three ways people resolve cognitive dissonance:

  1. Change our beliefs or behaviour to make things fit, become consonant.
  2. Find information (fake or otherwise) that shows us that things are aligned after all.
  3. Reduce the importance of the non-aligned belief or behavior.

What we know.

First, let's look at what we know. Our Paymark dashboard shows that there was an initial rush to spend, the predicted revenge shopping did materialise. Since then, we've seen a flattening curve which was a goal for the COVID virus, but not what the economy needs for spending patterns. How can we keep the spending momentum going after the initial thirst is sated?

 

Paymark Spend Trends Graph 1
Paymark Spend Trends Graph 2

Addressing cognitive dissonance

The question is: how can we help people resolve cognitive dissonance and encourage spending to support recovery, by converting motivation into action?

Every business has different challenges and different solutions at their disposal, so let's take an example of cognitive dissonance and see how it plays out, so that businesses can see what their version of this might look like. I've used smoking as an example.

1. Change people's beliefs or behaviours

People who smoke know it’s probably killing them and the only way they can achieve cognitive consistency is to give up, but they find it hard to change the behaviour.

What behaviour change during lockdown can we anchor to? Everyone walked and biked more so what products and services can we hang around that. Outdoor clothes, more data to use on the go, food to sustain you post/during exercise, visit the Great Walks and many more.

People got the learning habit whether it was an academic interest an industry up-skilling or a YouTube on how to make pasta (one in three people aged between 18 and 44 say they did an online course and 75% want to continue after lockdown). What products and services can we anchor to that? 

2. Provide information that spending behaviour and beliefs are aligned

People who smoke seek out supporting evidence that it isn’t a health hazard for example, Uncle George smoked 20 a day and lived to 90.

An example could be information about sustainability. Sustainability isn’t just about less consumption – it’s about what we consume. Sustainability includes economic sustainability so for example support sustainable tourism activities, promote low energy/low carbon strategies. Providing information about sustainability allows people to see that they can consume in a way that is socially and morally supportable.

Support local is trending strongly in our COVID Monitor. An example is a new website ‘ShopKiwi’ which supports businesses that import products, but still contribute to the local economy – so providing information that that spending with these companies is still doing the right thing.

3. De-prioritise or reduce conflicting beliefs

People who smoke may decide that it’s better to live a shorter life but have’ fun’ doing it by enjoying smoking.

Spending is helping the overall economy so enable people to see that though there are downsides, it’s still the best thing to do. Give people permission to have fun and enjoy spending because it’s guilt free and it cheers everyone up. Those new shoes put a bounce in your step and we need everyone optimistic and positive to help get us through this.

And, the opening of Commercial Bay is a proxy for a reboot of the Auckland CBD and a drawcard to bring people into the city so by supporting the mall people can feel they are supporting the city, for all of its residents - not just themselves.

If you’d like to drill further into the Paymark spending data or the COVID-19 Monitor let us know - it would be great to hear what ideas you have for reducing dissonance

Colleen Ryan
Partner at TRA

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