Announcements

Marketing Seminar- Joyce Liu

Author: CASE
Time: 10:00
Location: CASE 127

KOC UNIVERSITY

FACULTY OF ADMINISTRATIVE SCIENCES AND ECONOMICS
MARKETING SEMINAR

11 October 2019-FRIDAY
CASE 127- 10:00

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Speaker :  Joyce Liu is a PhD candidate in marketing at HKUST 

Title       : : Income Inequality and the Protective Effect of Favorite Possessions on Subjective Wellbeing

Date    :   11 October 2019- FRIDAY

Time      : 10:00-11:30

Place      :CASE 127

Abstract: Rising income inequality is taking a toll on the subjective wellbeing (SWB) of consumers worldwide. This happens because income inequality makes consumers feel more relatively deprived, and feelings of relative deprivation reduce SWB. In response to income inequality, consumers often turn to material acquisition. But this response is problematic because it leads to overspending and debt, which ultimately hurt SWB in the long run. So, how can consumers cope with the psychological impact of income inequality in a more sustainable and effective way? One approach is to examine whether consumers can utilize goods that they already own to buffer against income inequality. We argue and show that the negative effect of income inequality on SWB can be eliminated when consumers direct their attention to their favorite possessions. This is because the value of favorite possessions is idiosyncratically-derived and incommensurable with the value of others’ possessions. As a result, focusing on a favorite possession reduces social comparison tendencies (the catalyst of feeling relative deprivation), thus, mitigating the effect of income inequality on relative deprivation and, in turn, SWB. The interaction effect of income inequality and favorite possession on SWB is observed based on data collected from over 4000 respondents across ten countries and is robust to controlling for individual-level factors such as SES and materialism. Moreover, favorite possessions function as buffers against both subjective (i.e., perceived) income inequality and objective (i.e., actual) country-level income inequality. Furthermore, we demonstrate the effectiveness of a longitudinal intervention that trains consumers to repeatedly focus on their favorite things, and we show that the beneficial effect of the intervention persists over a delay. Lastly, we extend these findings to an everyday consumer context, namely, social media. An analysis of commonly used hashtags suggests that sometimes consumers do focus on their favorite things – specifically, when posting their possessions on social media platforms like Instagram. We designed an experiment to parallel the Instagram context, and show that posting a photograph of a favorite possession on social media mitigates the negative effect of income inequality on SWB. The key contribution of this research is its implications for consumer welfare: rather than turning to material acquisition to cope with income inequality, consumers should instead turn to their favorite possessions.