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Journal of the Academy of Marketing Science
Published in: Journal of the Academy of Marketing Science 6/2023

11-10-2021 | Original Empirical Research

The effect of financial scarcity on discretionary spending, borrowing, and investing

Authors: Gülen Sarial‑Abi, Aulona Ulqinaku, Giampaolo Viglia, Gopal Das

Published in: Journal of the Academy of Marketing Science | Issue 6/2023

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Abstract

Past research indicates that individuals with scarce resources focus on urgent needs. We hypothesize and find that individuals with scarce financial resources have greater discretionary expenditures such that they engage in more discretionary spending, borrowing, and investing. We demonstrate that one possible explanation for why those with scarce financial resources have greater discretionary expenditures is because they have more optimistic future perceptions. We support our predictions using a sample of over 60,000 observations from a survey in rural India, two archival datasets from surveys in Italy and Germany, and two preregistered online experiments. We control, test, and rule out different alternative explanations. The results of this research extend the findings in the financial scarcity and discretionary consumption literature. Additionally, we provide actionable guidelines for managers and public policy makers on how to nudge individuals with financial scarcity.
previous article On the strategic use of product scarcity in marketing
next article Correction to: The effect of financial scarcity on discretionary spending, borrowing, and investing

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Appendix
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Footnotes
1
Other Backward Class (OBC) is a term used by the Government of India to classify castes (i.e., a form of stratification) that are socially or educationally disadvantaged.
 
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Metadata
Title
The effect of financial scarcity on discretionary spending, borrowing, and investing
Authors
Gülen Sarial‑Abi
Aulona Ulqinaku
Giampaolo Viglia
Gopal Das
Publication date
11-10-2021
Publisher
Springer US
Published in
Journal of the Academy of Marketing Science / Issue 6/2023
Print ISSN: 0092-0703
Electronic ISSN: 1552-7824
DOI
https://doi.org/10.1007/s11747-021-00811-0

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