Beware Black Friday

In honor of the upcoming shop-a-thon known as Black Friday, I am linking to last week’s article in Newsweek about how we need to shop.  The science behind this impulse is the same that we deal with negotiation in terms of how clients view risk, loss, and gratification.  In full disclosure, here’s a picture of  my most recent inability to delay gratification. 

As the authors write,

Indeed, the choice to spend rather than save reflects a very human—and, some would say, American—quirk: a preference for immediate gratification over future gains. In other words, we get far more joy from buying a new pair of shoes today, or a Caribbean vacation, or an iPhone 4S, than from imagining a comfortable life tomorrow. Throw in an instant-access culture—in which we can get answers on the Internet within seconds, have a coffeepot delivered to our door overnight, and watch movies on demand—and we’re not exactly training the next generation to delay gratification.

“Pleasure now is worth more to us than pleasure later,” says economist William Dickens of Northeastern University. “We much prefer current consumption to future consumption. It may even be wired into us.”

As brain scientists plumb the neurology of an afternoon at the mall, they are discovering measurable differences between the brains of people who save and those who spend with abandon, particularly in areas of the brain that predict consequences, process the sense of reward, spur motivation, and control memory.

The article goes on to explain far more of the science behind our spending habits and how, in the future, we might be able to disable this.  In the meantime, I’ll just need to avoid certain shoe stores in NYC!

14 thoughts on “Beware Black Friday”

  1. As I read through the Newsweek article linked above, I was reminded of several recently-aired TV commercials that spoke about teaching your kids the value of money. One in particular portrays a young boy returning home to his father, while proudly holding a large and colorful popsicle. Unfortunately, however, this boy was also lacking the bike his father had recently purchased for him. This boy obviously hadn’t yet learned about things such as the value of money and delayed gratification. And while it may be understandable for a young boy not to appreciate these matters, the Newsweek article portrays this as a society-wide problem. So what exactly is the excuse for the rest of us?

    I myself am no better; I frequently choose immediate gratifications over delayed rewards, especially in regard to saving and spending. Given my education, one would think (or perhaps hope) that sound financial decisions would be the norm rather than the exception. But then I started to think about the actual classes I’ve taken, and I realized there weren’t many opportunities to learn these lessons. Although my high school offered calculus, chemistry, and other “college-prep” classes, it lacked a single one focusing on economics, accounting, or finance. (Disclaimer: I attended a small, rural school.) Furthermore, although classes such as these were offered in college, they certainly were not a requirement for graduation – unlike taking classes in the humanities and natural sciences for instance. Thus, aside from hearing and reading snippets in the news, I knew very little about markets, the economy or most matters relating to money. These concepts were not beyond my understanding, rather I just hadn’t been exposed to them – not unlike BATNAs and reservation points prior to an ADR class.

    It actually wasn’t until years later when I sat down with a sales manager at my former company that I learned a little bit about IRAs, 401(k)s, and the importance of saving and investing at a young age. Prior to that conversation, I had no idea that the “when” of saving/investing was just as important as the “how much” (and perhaps even more so).

    I guess my point is this: Perhaps we wouldn’t need to “rewire [our] brain to find pleasure in future rewards” if we just had better educated and “wired” from the start. If immediate gratification and lack of saving are indeed societal problems, why aren’t we doing more to teach matters of finance and economics to children at a younger age? Why aren’t those classes made fixtures in the curriculum alongside math, science, and reading? Because as I look back now, I can’t tell you the last time I used calculus or chemistry in my everyday life, but finance and accounting were a couple of classes I really could have used.

  2. I think just about everybody, including myself, knows how powerful the “buy now, feel guilty later” impulse can be. I recently remembered that the credit card my wife and I have is a “rewards card” and decided to check our points balance. Having never checked in the last three or four years, I was pleasantly surprised to find that we can get hundreds of dollars in gift certificates for Amazon. My first thought was “I can buy and Xbox 360 with that money.” Luckily, my better senses prevailed and I thought a) It would be a lot smarter to use those certificates to buy Christmas gifts for family and friends and save the money we would otherwise have to spend, and b) it’s going to be really hard to explain to my wife where that new gaming system came from.

    I think that the instant gratification we seek applies to areas other than shopping. The first thing that comes to mind is substance abuse. Smoking cigarettes for example: the gratification that a person gets from the temporary stress relief that a cigarette might provide is much stronger than the long term benefits of improved health and longevity. I listened to a radio show a little while ago that stated the best way to combat these types of impulses is with similar types of instant consequences. For example: “I swear that if I smoke another cigarette, I’m going to donate $500 to the Republican National Committee.” No I’m able to combat that instant gratification I might get from the cigarette with the instant pain I’m going to feel from donating money to a cause that’s at odds with my beliefs, and that I also can’t afford.

  3. First, let me say how much I love the new shoes.

    I think we have all had cases of “buyer’s remorse” but more recently I have engaged in what I like to call “retail therapy”. With all the stresses of law school, the occasional trip to the mall or shopping online provides me with some much needed stress relief. And with AmazonPrime shipping or next day delivery, it is easy to buy something one day and receive it the next. It really is almost instant gratification. The problem with this is that the feeling is only temporary. After a day with the new shoes or new coat, the rush of “retail therapy” dissipates and all I am left with is a smaller bank account and a trip to Target to get more clothes hangers.

  4. In referencing the link between our common desire for instant gratification and negotiation, this post quickly reminded me of the contrast between negotiation approaches in retail transactions taken by myself and my wife.

    First, me: the avoider. I am almost always willing to pay a premium in order to have the transaction complete within as little time as possible (a.k.a. Internet shopping). I simply pay the price that is asked and move on with my day. How is this justified? My best alternative is a time limit: not spending more than 5 minutes on a given purchase. Thus, my worst-case-scenario is that I end up empty-handed, having sunk 5 minutes of my time into the effort. Best case scenario? I pay full price and spend 3 minutes; quintessential instant gratification.

    Next, my wife: the asserter. She was recently delighted to find a box outside our door when we returned home from Thanksgiving. Why was she delighted? Because inside that box was a pair of free slippers. Her assertiveness during a 10 minute phone conversation clearing up a shipping mishap rewarded her with pair of house slippers. How is this justified? Her best alternative is an add-on: after landing a deal, her objective is to get more for her deal—even if that something is not something which she immediately desires. Thus, her worst-case-scenario is a denial of her add-on, and she ends up with the thing which she originally sought. Best case scenario? She gets her item and something else she immediately wants.

    No doubt, these two negotiation approaches would stand apart from one another, plain as day, in a large-scale commercial transaction. But these examples still serve to illustrate how an unwavering avoidant approach to negotiations can actually inhibit market competitiveness. Retailers wouldn’t be expected to bend over backwards for a customer who refuses to give them the time of day (my approach). Conversely, retailers have more incentive to satisfy a shopper who takes an active interest in completing a transaction with them (my wife). As obvious as this may seem, it sometimes takes a few nights of chilly feet to recognize the value of zealous bargaining.

  5. The idea of “training the next generation to delay gratification” is interesting. In the Newsweek article, humans inherently prefer instant gratification. But my grandparents grew up during the Great Depression, do they prefer instant gratification? Maybe not like their grandchildren do, but they do have candy jars strategically placed throughout their condo. For them, the conditions of their upbringing tempered their desire for instant gratification. Perhaps, learning by experience, is the only effective way to “train” future generations.

  6. This reminds me of a youtube video I recently saw. The video was about procrastination, but a lot of its themes fit this subject matter.

    In the video, it talks about people having a “present bias.” Present bias is our minds way of knowing what we want now, but disregarding what may be best for our future selves. The impulse to buy something that we want now, but may not benefit us in the long run is the perfect example of present bias.

    The video goes on to explain that we essentially have to think about thinking, and ultimately trick our mind so that we can overcome this obstacle. One way to overcome the obstacle of instant gratification would be to conscientiously make ourselves wait a day or two before acting on this impulse. Further, if you still decide to go to a store and buy something, maybe write out a list of what to buy, not allowing yourself to stray from the list.

    The idea of writing out a list is similar to BATNA’s in the negotiation setting. It is always good to have a set of goals as well as a time that is best to walk away from the table. This allows a person to be in a better position of getting what they want, and not making bad decisions.

    However, all of that aside, sometimes it is pretty great to randomly buy things we need. Life can not always be business. Why not have a good time here and there? Just make sure to not get too out of control. Therefore, why not buy the shoes?

  7. The draw of instant gratification is obvious as whatever we are seeking is quick and certain. Long range planning is less certain and presents risks we may never be completely aware of. Our society, with smartphones and constant access to resources like the internet, is trending towards an expectation of instant answers. I think the most concerning aspect of these trends is that we are trained in these expectations in mundane activities of our everyday lives but often overlook how they may affect the way we make other decisions and more importantly how we may approach decisions in our jobs. While certainly there doesn’t seem to be much harm in an impulse purchase at the mall, but as we learned in our ADR class, an impulse decision in a negotiation may be fatal to a beneficial settlement. Personally I don’t consider myself self aware enough to fully understand how acting impulsively in everyday activities affects how I approach more important decisions, but I do feel concerned about that uncertainty. This article is just another reminder to constantly reflect on those decisions.

  8. I also absolutely LOVE the shoes. I think Black Friday in general is a great example of every day people developing and (hopefully) using their BATNA. While a lot of the deals are fantastic, the consumer needs to know when enough is enough and walk way when the deal, in the aggregate, is no longer a “deal.” For example, if Wal-Mart is selling a $500 LED TV, but while in line there is a woman who starts pepper spraying others in line, perhaps you’ve hit your BATNA and it’s time to walk away from this deal.

  9. I found the article to be very interesting. I feel that I am, at times, the opposite of the younger people who need that instant gratification. I recently noticed that I really dislike making major decisions without sufficient time to weigh all the options, consequences, etc. Perhaps this is why I did not participate in Black Friday this year. In years past, I excitedly went shopping at 4am in my pajamas like everyone else. However, with this recent realization, I would much rather avoid the commotion (and pepper spray) and consider my options before making any purchases. Don’t get me wrong though. There are plenty of things I still want right now, such as my morning coffee.

  10. It’s interesting to think about this idea when compared to the concept of the time value of money. Generally, money now is worth more to use than money later. This is justified by adding the interest we could earn on the money if we were to have it now, and the fact that we would loose this interest if we were to have the money later.

    Perhaps the idea of consumption now works on the same process. It seems like people would prefer to have the item in question now, so they can enjoy that purchase (or, benefit from the “interest”) instead of having their money gain interest in the bank.

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