'Tis the season for spending for many. An estimated 197 million people shopped from Black Friday to Cyber Monday, according to the National Retailer Federation. On Black Friday alone, consumers spent a record $33.6 billion.
In the leadup to Black Friday, media platforms were flooded with advertisements designed to get consumers to depart with their cash in exchange for goods and services. But what really influences people’s decisions to shop? What happens to them psychologically and physically when they are buying something? And is there another hobby just as joyous — but less expensive and more sustainable? Uma Karmarkar’s research examines the factors that consciously and unconsciously influence how people make decisions, including purchases and what that means for markets.
The associate professor, who holds a joint appointment at UC San Diego’s Rady School of Management and School of Global Policy and Strategy, was recently selected to be part of this year’s cohort of the Marketing Science Institute’s Mid-Career Scholars, and she currently serves as president for the Society for Neuroeconomics.
“Neuroeconomics is a field of study that uses theories and methods from neuroscience, psychology and economics to better understand how people make real-world decisions,” Karmarkar said.
Karmarkar, who holds a Ph.D. in neuroscience from UCLA in and a second Ph.D. in consumer behavior from Stanford, sat down with UC San Diego Today to give more background on neuroeconomics and explain the science behind shopping.
Firstly, what attracted you to the field of neuroeconomics?
I started out my scientific career in neuroscience looking at how the individual brain cells coded, stored and communicated information in networks to help us keep track of time, learn new things, or create new memories. As I learned more about the emerging field of neuroeconomics, I began to understand decision-making as a complex process that could draw on all the cognitive functions I was studying in a range of really interesting ways. And it was also a topic that would let me connect basic science research with everyday human behavior. I found it very exciting that we could build models from brain to behavior on how we make choices about health or career or finances, or even shop for groceries.
How do you study neuroeconomics?
Fundamentally, neuroeconomists are interested in choices, so we run a lot of psychology and/or behavioral experiments where people make choices or tell us about their evaluation of options. My own research has also drawn on functional magnetic resonance imaging (fMRI) scanning, which is a technique that allows you to track how activity changes in people’s brains while they’re making various kinds of decisions. I’ve also done some work with eye-tracking — that is, measuring what people look at, and for how long — to help know what information they paid attention to or found useful. My colleagues in the field use a range of other neurophysiological methods as well, including genetics, hormone testing and even brain stimulation approaches.
What happens in the brain when someone is shopping and is the process different for in person shopping vs online shopping?
There’s a lot going on! At the simplest level, it turns out there’s a part of the brain, (ventral striatum) that codes how much we like the items we are seeing, even if we’re not actively making a shopping decision about them. To oversimplify this a bit, you could say that at least part of your brain is figuratively always browsing the aisles. When we do start thinking about whether to spend money on that product, several studies, including my own, suggest we recruit additional neural circuitry to consider the price, our willingness to pay for the product and the overall decision. These liking-and-paying brain processes are similar across in-person versus online shopping. But other research suggests there are factors such as the presence of other people, or interactions with physical products and displays that can create differences between being in a store versus looking at a webpage.
How does the brain respond to brand name products?
Brands can offer familiarity and confidence in situations where we’re not sure about which product to buy, and that confidence is rewarding at the level of the brain. We recognize brands from memory and have relationships with them that evoke feelings that shape our decisions. One really interesting thing that’s come out of consumer neuroscience is that these relationships to brands are strong and multi-faceted, but also that they’re not the same relationships that we have with people. It’s useful to know that our brain does code for a brand we like differently than how it codes for a person we like.
How do companies use neuroeconomics to market their products?
A lot of my work in neuroeconomics is specifically consumer neuroscience, meaning that it is targeted at addressing consumer research questions. While some companies run their own “neuromarketing” studies, several draw from consumer neuroscience findings like mine to inform their marketing strategies. As one example, I’ve talked to firms about the kinds of products they might use in their “recommended” items when shopping online. Suppose you’re on a page for a sweater and thinking about adding it to your cart. You might see other recommended products displayed on the page. I’ve done eye-tracking work suggesting you’re more likely to buy the sweater if it “matches” the recommended products, like seeing your preferred sweater with other sweater options. The presence of matched products on the page helps you feel more engaged with a “sweater-specific” decision. But if you’re seeing mismatches, like earrings or even home goods, you look around more and you’re less likely to buy. The range of mismatched products (literally) takes the focus off sweaters in particular.
How can consumers make decisions that may feel as rewarding as buying a product but have a more sustainable impact on the environment?
The good news for us all is that the same brain areas that respond to the reward of buying things are also the ones that respond to life’s other pleasures. So beyond necessities, we have options for treating ourselves in different ways, including more sustainable ones. It doesn’t have to be a sacrifice — maybe a massage is a more sustainable option than a product made out of non-recyclable plastic. Another facet of this is newness — we like novelty and new things. So, in some cases we lose the feeling of reward with what we own over time. Even if we still enjoy our things, it’s hard to resist the reward of a new item. But consumers are already recognizing that “new to me” can be just as rewarding and that there are joys of discovery or in renewing something’s value.
How does your work help people be more intentional with how they consume?
The most useful advice is probably some of the most boring advice — to be a more conscious consumer, think about what your goals are before you get into shopping situations. Impulse purchases are called that for a reason — as I mentioned, your brain is always browsing. If you don’t plan ahead for how much you want to spend (and why) it’s harder to construct those plans in the moment. That’s also why shopping lists are a key decision-making tool. Another thing my research suggests is to remember to take a step back and open your “consideration set” — remind yourself of the other things you could do with your money (and your time!) If the product you’re thinking about still wins that decision, maybe it’s the right thing to buy after all.
To learn more about Karmarkar’s research, watch this video, “Your Brain on Shopping,” produced by Patagonia, or this video interview with Poets and Quants, titled “The Neuroscience of Marketing.”
Uma Karmarkar, associate professor, an associate professor with a joint appointment at UC San Diego’s Rady School of Management and School of Global Policy and Strategy.
