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February 13, 2008

So, the Recession Has You Down? Great, That's Bullish!

Everyone is getting fairly down about the whole recession subject in the U.S. You know, people losing their jobs, companies shutting down, slackening consumer spending, etc. Very sad.

But wait. A new study says that people feeling sad spend more money to acquire the same stuff than do people who are not sad. Here is a summary:

In the experiment, participants viewed either a sad video clip or one devoid of human emotion. Afterward, participants could purchase an ordinary commodity, such as a water bottle, at various prices. Participants randomly assigned to the sad condition offered almost 300% more money to buy the product than “neutral” participants. Notably, participants in the sadness condition typically insist, incorrectly, that the emotional content of the film clip did not carry over to affect their spending.

Whoa, so unless people drop spending massively, the solution during the current recession is for companies to jack prices, because sad people will spend more than enough to make up for decreased total buying during the downturn. Someone should tell Ben Bernanke to stop cutting rates.

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