Join for a talk with Jorge Jacob, Visiting Scholar at Columbia University . He will talk about the The Price of a Threat: How Social Identity Threat Influences Price Sensitivity.
This talk is part of the Brazil Research Seminar Series.
Traditional economic theory suggests that poor consumers are more price sensitive than their wealthier counterparts. The current article demonstrates that even when identity-vulnerable (i.e., poor) consumers can exert price sensitivity, they often choose not to do so in a systematic attempt to circumvent identity threats in intergroup contact marketplace.João built the reputation of a reliable worker in a low-pay but quite stable job. Nonetheless, life has been tough on him. The adversity transcends financial considerations. João is black, uneducated, and lives in a low-income community. It did not take long for him to learn the hard way about downward social comparisons, discrimination, stigma, and the likes. No wonder he is highly sensitive to cues that threaten one or multiple dimensions of his social identity and that makes it clear that racial segregation is well and alive in the city. Cues that, whenever possible, he tries to avoid.
Given the financial constraints, standard economic theory and sheer intuition would predict consumers like João to be highly price sensitive. For many purchase decisions, that is indeed the case. Scholarly research has successively demonstrated that the poor are more price sensitive than their wealthier counterparts. However, as João’s example highlights, most consumers on the far-left side of the income distribution are not only short on money. They are also uniquely sensitive to the marketplace cues that threaten one or several dimensions of their social identity. In this paper, we investigate how these two income-covarying forces—perceived social identity threats (SITs) and financial paucity—influence consumers’ sensitivity to the monetary dimension of the target choice (e.g., the price of a product or the value of voucher).
Our research advances the field by documenting when and why consumers from impoverished areas (i.e., hereafter, identity-vulnerable consumers) become, counterintuitively, less price/prize sensitive than their much wealthier counterparts (i.e., hereafter, identity-guarded consumers). We expand the so-called “ghetto tax” by showing that even when consumers can exert price sensitivity, they often choose not to do so in a systematic attempt to avoid the SITs of the purchase environment where the cheapest option or most valuable prize happens to be located. In doing so, our findings broaden the array of consequences of SITs while contributing with a new effect to the burgeoning scarcity literature.
Across four experiments run with Brazilian and U.S. samples, with hypothetical and consequential scenarios, we have shown that to avoid intergroup contact in commercial settings, identity-vulnerable (i.e., poor) consumers were willing to pay a higher price for both products and services and accepted lower-value rewards when compared to identity-guarded (i.e., wealthy) consumers.
The talk will be held on December 6thh, 2018 from 1:00-2:00 PM in room 802 at the International Affairs Building (420 West 118th Street).
Food will be served.