Inequality of Opportunity Cost Consideration
Serena Hagerty (solo-authored)
Lower-income individuals are often subject to harsher evaluations of their consumption decisions relative to their higher-income peers. This research investigates a novel mechanism for why these systematically negative judgments arise. Eight studies (and five replication studies) demonstrate an inequality in opportunity cost consideration. Across a variety of products and purchase situations, individuals are more likely to spontaneously generate opportunity costs when observing a purchase made by a low-income (vs. high-income or unknown income) consumer (Study1). Even when prompted to consider opportunity costs, those observing low-income consumers tend to consider alternatives that are more basic necessities than the purchased item, often considering alternatives that are outside the product category or the intended purpose of the purchase (Study 2). This inequality of opportunity cost consideration explains, in part, why the same items are perceived as less necessary for low-income consumers: individuals evaluating the necessity of a purchase made by a low-income consumer are spontaneously comparing it to more necessary alternatives, while purchases made by high-income consumers are less likely to be compared to foregone alternatives of any kind (Studies 3A and 3B). Importantly, when opportunity cost consideration is inhibited, the income effect on perceived necessity is mitigated (Studies 4A and 4B). These findings help explain why the purchases of low-income individuals are often scrutinized and deemed to be impermissible (Study 5) and, further, why low-income individuals are punished for how they choose to spend gifted or donated funds (Study 6).
Consumers Oppose Political Activism by Companies That Sell Necessities
Joseph J. Siev, Serena Hagerty, Tami Kim, and Luca Cian
Many consumers say companies should take stances on political issues, but surveys rarely ask whether specific types of companies should do so. The current research proposes that consumers view political activism as more acceptable for some firms than others, depending on the perceived necessity of what firms sell. Consumers believe companies that sell necessities (vs. non-essential goods/services) should avoid actions that limit access to their products or privilege some consumers’ access over others’. Because political activism is divisive, it seems inconsistent with that standard, and consumers want companies that sell necessities (vs. non-necessities) to avoid political activism. Four preregistered main studies and two supplementary experiments (N = 4,585) demonstrate this across various relevant industries (from carbonated beverages to trash collection) and political issues (from affirmative action to gun control to LGBTQ issues) and in real consumer-brand social media interactions. The effect of perceived product necessity on preferences for corporate political neutrality was especially robust among liberal consumers but often also emerged among conservatives. It was reduced when consumers regarded activism on a particular issue as compatible with ensuring universal access. Advancing marketing theory and managerial practice, these findings show that product type affects how consumers evaluate corporate political activism.
(Still) Building a Better America: A Replication of Norton and Ariely (2011)
Serena Hagerty, David E. Levari, and Michael I. Norton
In their 2011 article, “Building a Better America—One Wealth Quintile at a Time” (Perspectives on Psychological Science, 6(1), 9-12), Norton and Ariely showed that across demographic backgrounds, political ideologies, and income levels, respondents underestimated current wealth inequality, and preferred a more equal distribution of wealth. Discussion of economic inequality by policymakers, researchers, and the public at large has increased in the intervening years, but do Americans still underestimate wealth inequality and desire even less of it? Our pre-registered direct replication (N = 5897) shows that, to a very similar degree, Americans continue to underestimate actual wealth inequality, and continue to desire a more equal distribution of wealth.
Consumer Responses to Premium Services: The Role of Zero-Sum Beliefs
Serena Hagerty, Debora V. Thompson, and Chris du Plessis
Many firms provide premium services that provide an enhanced level of customer experience for those who can afford them, benefiting both users and companies. However, premium services do not receive universal acceptance. Across six studies (N = 4,186), we find that consumers, under certain conditions, respond more negatively to premium (vs. non-premium) service growth strategies. This negative response is driven by zero-sum beliefs—beliefs that the introduction of premium services detracts from the experience of basic service users. Notably, these beliefs influence consumer reactions to premium service introductions, independently of considerations related to the affordability of the premium offerings. The negative effect of premium service introductions is most pronounced among individuals with weak beliefs in social mobility and among those that identify with a liberal political ideology. Our research demonstrates that firms can alleviate the negative response to the introduction of premium services by designing premium services with non-zero-sum features or by using profits from these services to subsidize non-premium options. By highlighting the role of zero-sum beliefs, we contribute to the literature on vertical line extensions, showcasing when and why non-premium consumers react negatively to premium service innovations.