Egos soothed when buying on plastic

Get turned down for a promotion? Feel like it's you against the world? If so, you're more likely to soothe your soul with a credit card purchase than a cash purchase, according to research published in March 2011 in the "Social Psychological and Personality Science" journal.

According to the study's authors, Nathan C. Pettit (Cornell University) and Niro Sivanathan (London Business School), the more you feel threatened, the more likely you are to avoid further pain by paying for a desired item with easy credit instead of precious cash.

Makes sense to me. Kind of.

Pettit and Sivanathan wanted to expand upon the widely accepted theory that lower socioeconomic consumers tend to "engage in conspicuous consumption" to validate their self-worth. They wanted to include how consumers pay for their purchases when their self-worth is in doubt -- via cash or plastic. And, surprise, plastic won

The "interactive effect of self-threat, product status and payment method creates a perfect storm, whereby threatened individuals not only seek to consume high-status goods but also, when using credit, do so at higher costs to themselves," say Pettit and Sivanathan.

Apparently, according to the authors, when a person is already feeling low, paying with cash makes them feel lower. When paying with a credit card, however, they can put off the pain -- at least until the bill comes in -- and temporarily boost their feelings of self-worth.

Here's a scenario to illustrate Pettit and Sivanathan's theory: You discover your boyfriend is cheating on you. What do you do? You run out to the mall and buy those $118 butt-hugging pink Juicy Couture workout pants instead of the $20 knock-off pair you could pay for with cash at T.J. Maxx. And for maybe 24 hours, you feel just a little bit better. While not a big fan of Juicy Couture or binge-spending, I think you get the gist.  

With all due respect to the researchers, this study seems to be pointing out the obvious, except for the fact that in this lovely recession we've been having, people were feeling bad AND they were paying down their credit card balances (or getting their balances charged off) -- from $974 billion in August 2008 to $796 billion in March 2008. So perhaps we can hope that we have the ability to check our low self-esteem at the door in hard times, but in better times we'll return to our time-worn habits.