Payday proximity changes consumer motives, behaviour: study

As any nine-to-fiver will testify, a new paycheck brings with it a familiar sense of freedom, albeit one that dwindles in lockstep with the balance in one's checking account. But, it's not account size that influences consumer behavior; rather, it's the time that has elapsed since payday, according to a new study published in the September issue of the Journal of Marketing.

Payday proximity means more than awareness of the amount of money in the bank and product prices. It actually changes consumer motives, response to messages and purchase behavior, report University of Utah marketing professors Himanshu and Arul Mishra.

"Our findings are surprising because previous research has always considered preferences to be relatively stable, not changing much over time," said Himanshu Mishra. "We find that not only do preferences change during such a short duration – paycheck to paycheck, but also that they fluctuate between a promotion and a prevention focus."

Newly paid consumers are more likely to spend money on "promotion-focused" products and services – those that make their lives better, if even in a small way. As the previous payday gets further away, though, consumers are motivated to choose products that are "prevention-focused" – that preserve their current standard of living.

How Salary Receipt Affects Consumers' Regulatory Motivations and Product Preferences, co-authored with Dhananjay Nayakankuppam of the University of Iowa examines how consumers' behaviors change as the length of time from their last paycheck increases.

"As time goes by and your paycheck is almost spent, you want to maintain your status quo," says Mishra.