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See Inside Scientific American Mind Volume 23, Issue 2

The Perils of Paying for Status

Knowing when to pass on that luxury limo or overpriced pen
status, price, psychology, prestige



Mario Wagner

WE ALL YEARN to feel important, powerful and popular. The desire for social status is one of the most important factors driving human behavior—our rung on the social ladder can determine whom we marry and how long we live, among other things. Recent research suggests, however, that some of our attempts to boost our place in the social hierarchy can backfire: our actions may make us feel better temporarily, but they increase the chances we will be stuck with lower status in the long term.

A feeling of powerlessness or lack of influence, recent studies suggest, may prompt us to pay more for products or services. It may even make us eat more. Doing so repeatedly could end up making us poorer or less attractive, diminishing our status instead of raising it. Knowing how and when status influences our decisions might help us break the vicious cycle.

Expensive Taste
Stereotypes, such as racial or cultural ones, often cast certain groups as lower status. A commonly used tool in psychology is to remind study participants of a certain stereotype and then observe if and how their behavior changes in response. In an experiment published in 2011 psychologist Aarti Ivanic of the University of San Diego, along with her colleagues, recruited 113 African-American and Caucasian shoppers at a mall. They showed half of the African-Americans a list of 10 stereotypical characteristics of their race, including “high athletic ability” and “low performance on an academic test,” and asked them to indicate how much each one applied to them personally.

The participants then received a description of high-end headphones and reported how much they would be willing to pay for them. African-Americans who had been reminded of racial stereotypes offered to pay nearly twice as much for the headphones as either Caucasians or African-Americans who had not been asked about stereotypical traits. The groups did not differ in their interest in actually buying the headphones. Therefore, the researchers concluded that racial typecasting may lead African-Americans to pay more as a way of coping with feelings of lower status. Unfortunately, this finding also hints that African-Americans may be regularly parting with more money than necessary.

This overpayment seems to occur in a variety of situations. In a second study, Ivanic and her colleagues asked 344 participants to imagine that they were planning a vacation, using a fictitious travel Web site. A $200-per-night standard room was the default travel package, but luxury rooms were also available. Participants were asked how much above the standard rate they would pay for the upgrade. African-Americans who had been reminded of their race (in a manner similar to that used in the previous study) offered to pay twice as much as Caucasians for the more costly room. The researchers speculated that African-Americans may attach a higher cash value to luxury because of a greater need to elevate their perceived place on the social ladder.

Widespread feelings of low rank may engender even more unfairness. After all, consumers who are known to pay more are very likely to be charged more, and investigators have found that prices are indeed sometimes higher for African-Americans. For example, in a 2007 study researchers at New York University determined that African-American home buyers in New York City were more likely than Caucasians to be offered mortgages with higher interest rates. The result held even after controlling for median household income.

Lighter Wallets, Wider Waists
No matter our race, we are all potentially vulnerable to feelings of low status, whether those perceptions result from losing a job, the breakup of a romantic relationship or receiving a bad performance review at work. In 2008 psychologists Derek Rucker and Adam Galinsky of Northwestern University reported that manipulating people’s feelings of status in various ways also changes the amount that people will pay for products. The researchers told individuals to write about a time they felt either powerful or powerless and then asked them how much they would be willing to pay for different products. Subjects who had written about feeling powerless offered to pay significantly more for luxury items such as a stylish pen or fur coat. Yet the desire for a quick fix for lowly feelings may put those who regularly feel as if they lack influence at greater risk of amassing debt—or at least of making some questionable investments.

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