Money Matters: How Red Versus Black Prices Impact Savings Perception Under Financial Scarcity

Recent research shows that the impact of red (vs. black) prices on store savings perception is moderated by gender. This paper investigates the interaction between colored prices (red vs. black) and financial scarcity (high vs. low) on perception of savings. With about 50 % of consumers having less than 3 months worth of funds to cover their monthly expenses, further investigation on the moderating effect of financial scarcity is important since bias in price evaluations could cause adverse financial consequences for those already experiencing financial hardship. This research reports findings from two experiments that assessed the relationship between colored prices and financial scarcity. These studies revealed that high financial scarcity individuals perceived greater savings with red prices relative to black prices, whereas low financial scarcity individuals did not (studies 1 and 2). High financial scarcity participants appeared to use the associations they had with red prices as a heuristic such that associations related to sales/discounts resulted in higher perception of savings.