Indulgence vs. Regret: Investing in Future Memories
Good news for makers of $20,000 watches and other luxury goods and services. Recent research from Harvard Business School professor Anat Keinan and a colleague suggest that we often regret not indulging ourselves earlier in life. Key concepts include:
- People can be too farsighted, or hyperopic, leaving wistful regrets of missing out on life's pleasures when they look back at how they spent their time.
- It's possible to motivate consumers to indulge themselves by simply asking them what they think they will regret in 10 years.
- Marketers can convince consumers that buying their product is actually a farsighted behavior, an investment in future memories.
We all know the moral of Aesop's fable about the industrious ant and the fun-loving grasshopper: Work now and save for the future, or else regret the consequences. And who hasn't been confronted with a similar dilemma? You know you should work late to finish that project, but an old friend is passing through town for one evening and hopes you can have dinner. What to do?
If you're more grasshopper than ant, research by Assistant Professor Anat Keinan is sure to please. In a series of papers coauthored with Ran Kivetz, a marketing professor at Columbia Business School, Keinan shows the harm of being toovirtuous and hard-working. She also presents a strategy to correct this behavior.
Aside from influencing how people choose to live their lives, Keinan's findings have implications for marketers hoping to convince consumers to purchase those guilty-pleasure goods that aren't entirely ant-like and practical.
"There is a well-developed literature around self-control issues in the fields of sociology, psychology, and economics," Keinan says. "We all know that people can be too impulsive and yield to temptation. Our argument is that people can also be too farsighted, or hyperopic. As a result, they have wistful regrets of missing out on life's pleasures when they look back at how they spent their time."
Permission to indulge
Keinan proposes a possible way to change that unfortunate outcome. In "Remedying Hyperopia: The Effects of Self-Control Regret on Consumer Behavior," forthcoming in the Journal of Marketing Research, she and Kivetz use a series of field studies to show that when consumers anticipate their long-term regrets, they're more likely to indulge in a choice that gives them pleasure.
In one studya group of 57 shoppers were randomly assigned to two groups and presented with the dilemma of choosing between an expensive clothing item that they loved and a cheaper item that would be just as useful but allow for savings to purchase necessities. Based on their assigned group, Keinan asked them to predict which choice would make them feel more regretful.
One group was asked to consider their decision from the distance of 10 years in the future; the other group was asked to predict how they would feel about their purchase the following day.
"We don't have to wait 40 years to learn from the experiences of others."
Keinan found that shoppers were much more likely to regret purchasing the cheaper clothing item if they were in the 10-year group. When explaining their anticipated regrets, 36 percent versus 3 percent explicitly mentioned considerations such as enjoying life and creating pleasurable memories. In contrast, 48 percent of the shoppers asked to evaluate their purchase the next day were more likely to cite the importance of frugal behavior.
To the mall!
Then the participants actually went shopping. On the bus ride home, they were asked to list what they had bought (not knowing that they would be asked to do so) and to rate each item on a 7-point scale ranging from practical (1) to pleasurable (7). Keinan also asked the shoppers to circle one of two answers for each item: "Because I need it" or "Because I want to have it (although I don't need it)."
As expected, items purchased by shoppers in the 10-year group were rated as being more indulgent and "wanted" but "not needed" than those purchased by shoppers who had been asked to anticipate their regrets the next day. (Two independent judges who were unaware of the study were also asked to rate the shoppers' items on the indulgence scale; their assessment supported Keinan's findings.)
"It's possible to motivate consumers to indulge and enjoy themselves by simply asking them what they think they will regret 10 years from now," she observes. "Obviously, this is very helpful for marketers who want to convince consumers to buy luxury goods."
The Swiss watchmaker Patek Philippe promotes the idea that its products can be handed down from one generation to the next, for example. With such a limitless time frame for enjoyment, and the benefits of a family heirloom, why would anyone who could afford to buy a $20,000 (and up) watch choose to do otherwise?
"Marketers can convince consumers that buying their product is actually a farsighted behavior," Keinan says. "In that sense, consumers are investing in future memories."
Of course this is just as true of experiences as durable goods, she adds. In another study, Keinan interviewed college students and alumni returning for their 40th reunion, asking the two groups to assess their level of regret about how they spent their winter breaks on a scale from 1 ("no regret at all") to 7 ("a lot of regret"). Some of the students were contacted a week after returning from their winter break; others were asked to look back on how they spent their winter break of a year ago.
Those who had spent their break working and studying were more likely to feel regret about not traveling if they were in the group that was looking back at their break of a year ago. Not surprisingly, alumni with 40 years of hindsight were even more likely to express wistful feelings of regret about experiences in which they didn't indulge.
"It was moving to learn from their experience," Keinan says of the older alumni. "And the student responses demonstrate that these feelings of regret actually start quite early in life. We don't have to wait 40 years to learn from the experiences of others."
So burn your to-do list and let's all go on vacation. And if you're in the business of travel marketing, think of ways to show us how we'll regret it 10 years from now if we don't.