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Context-Dependent Drivers of Discretionary Debt Decisions: Explaining Willingness to Borrow for Experiential Purchases

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  • Stephanie M Tully
  • Eesha Sharma
  • Darren DahlEditor
  • Paul HerrAssociate Editor

Abstract

Mental accounting research suggests that consumers prefer borrowing for longer-lasting purchases in order to receive benefits from the purchases as they pay for them. In contrast, two sets of archival data and five lab studies show that consumers are more willing to borrow for experiential versus material purchases, even though experiential purchases tend to have a shorter physical duration. Further, framing the same purchase as more experiential than material increases willingness to borrow. This effect occurs because purchase timing is more important for experiential purchases—a function of consumers’ aversion to missing out on planned consumption. Thus, we moderate the proposed effect by varying whether the borrowing decision impacts planned consumption. Other differences between material and experiential purchases, such as scarcity or expected happiness, cannot similarly explain our results. Moreover, our conceptualization allows us to reconcile the apparent contradiction between the previous and current research by examining the relative impact of purchase-timing importance and payment-benefit duration matching in different contexts (i.e., “purchasing” and “source-of-funding” decisions).

Suggested Citation

  • Stephanie M Tully & Eesha Sharma & Darren DahlEditor & Paul HerrAssociate Editor, 2018. "Context-Dependent Drivers of Discretionary Debt Decisions: Explaining Willingness to Borrow for Experiential Purchases," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 44(5), pages 960-973.
  • Handle: RePEc:oup:jconrs:v:44:y:2018:i:5:p:960-973.
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    File URL: http://hdl.handle.net/10.1093/jcr/ucx078
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    References listed on IDEAS

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    Cited by:

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    3. Iñigo Gallo & Chadwick J Miller & Nasir Haghighi & Thomas D. Gilovich, 2024. "The differential impact of uncertainty on the evaluation of material and experiential purchases," Marketing Letters, Springer, vol. 35(2), pages 187-203, June.
    4. Bastos, Wilson & Barsade, Sigal G., 2020. "A new look at employee happiness: How employees’ perceptions of a job as offering experiences versus objects to customers influence job-related happiness," Organizational Behavior and Human Decision Processes, Elsevier, vol. 161(C), pages 176-187.
    5. Malika Malika & Durairaj Maheswaran & Shailendra Pratap Jain, 2022. "Perceived financial constraints and normative influence: discretionary purchase decisions across cultures," Journal of the Academy of Marketing Science, Springer, vol. 50(2), pages 252-271, March.
    6. Silva, Emmanuel Marques & Moreira, Rafael de Lacerda & Bortolon, Patricia Maria, 2023. "Mental Accounting and decision making: a systematic literature review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).

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