The Marketer’s Antagonist: Leveraging Behavioural Science to Reduce Unnecessary Spending Behaviour

A TFI Research Challenge project by Garrett Meccariello and Tobias Nasgarde
Posted on March 30, 2018

The research project "The Marketer’s Antagonist: Leveraging Behavioural Science to Reduce Unnecessary Spending Behaviour" is one of the eight projects selected last year for the TFI Research Challenge.

In this report, the authors provide insights on how to make healthier financial choices and spend less online. Garrett Meccariello and Tobias Nasgarde conducted an online experiment to identify when and which type of pop-up warnings can encourage individuals to reduce online spending.


Individuals are making more purchases online than ever before. This shift to cashless payments is mostly driven by technological innovations that are often praised for their strides toward a digitised, modern future. However, what often goes unrecognised is the impact these transactions have on consumer spending habits. Research has established that consumers interact differently with money when it takes a non-physical form. Non-cash payments have been shown to increase the amount of money spent and the number of items that are purchased1. Online companies make it easier than ever for consumers to make purchases.

One-click buying options have reduced friction during the online shopping process and subsequently, have reduced consumers’ awareness about the amount of money they are spending. Cashless payments have been shown to reduce consumers’ ability to recall the amount of money they have spent, which can negatively impact future spending decisions2. Several small online purchases accumulated over time can become problematic when the perceived amount spent differs from reality.

We constructed an experiment to identify opportunities to encourage individuals to make healthier financial choices and keep track of their online spending. Our approach combines validated techniques to encourage healthier financial behaviour by reducing the amount of unnecessary purchases made online. Our research aim is to use behavioural science principles to reduce unnecessary spending.

Features such as the "One-Click-Buy" option make it easy for consumers to quickly purchase products online.

Interacting with funds in cashless environments

When purchases are conducted with methods other than cash, the amount spent is significantly larger than when using physical currency1. The variation in spending behaviour that exists with the form of payment is believed to be caused by the separation of the act of purchasing from the awareness of parting with the money3. The disconnect of parting with physical money is also believed to be one of the reasons why individuals experience difficulties in recalling the amounts of money that they spent using cashless methods2.

The difficulty  consumers encounter in successfully making online purchases − known as friction − has steadily declined due to popular features such as the “One-Click-Buy” option. Additional enhancements include the storing of payment information and conveniently displaying other products before check out that complement the one about to be purchased. These enhancements to the shopping experience reduce the steps required to complete a purchase, allowing them to be made with one quick decision. 

Different ways of thinking

When consumers spend their money without experiencing the “pain of purchasing”, their ability to utilise internal processes to make decisions is reduced. Individuals process information using two distinct mental mechanisms, the System I and System II4. The System I thought process is responsible for fast, implicit choices that are guided by short-term desires. System II is utilised during slow, deliberate moments that require additional levels of attention. System II is more suitable for making long-term financial decisions, however, people most often think with their System I process. Relying on the System I to make decisions can be problematic because it uses shortcuts to save effort, often resulting in suboptimal decision making5.

Mental Accounting

When individuals use their System II properly, they are able to make more informed, long-term beneficial decisions. Individuals are able to use a form of analytical thinking, known as mental accounting, to organise their money. Just as businesses create yearly budgets and keep track of spending, the practice of mental accounting describes how individuals allocate and keep track of funds using “mental accounts” in their minds6. Depending on the purpose for which the money is mentally earmarked, the level of ease with which it can be spent will differ. If mental accounting is conducted in a self-constraining way, it should be psychologically harder to spend money that is needed to pay rent on other unnecessary items. When the mental accounting framework is misused, individuals may handle money in an irresponsible manner7.

Applying methods of behavioural change to online shopping process  

Previous research has identified techniques that have been effective in changing unhealthy behaviour. Our experiment aims to build on these successful methods and leverage them to reduce unnecessary spending in an online shopping environment. Perhaps the most well-known method used to impact behaviour is the “nudge”. A nudge is a subtle, deliberate change or addition to a choice situation that gently pushes individuals toward reaching a goal without forcing or limiting their actions8. Nudges are effective in a variety of contexts and can be as simple as changing the default option of a choice; this technique has been shown to increase individuals’ contribution to their retirement savings9.

Loss aversion

Nudges are commonly leveraged in combination with the notion that humans are averse to incurring losses. If an individual is presented with two options with identical outcomes and probabilities, except that one is described as a loss and the other as a gain, the individual is much more likely to choose the one that does not include a loss10. Loss aversion is one example of the mental shortcuts humans take when utilising quicker thinking, and results in a tendency to go to greater lengths to avoid losses than to seek an equivalent gain10. Hence, framing undesirable behaviour as a loss may be effective in diverting people from engaging in it. In our experiment, we combine the nudging technique with a message framing a purchase as a loss of a future goal.

Temptation bundling

Another concept that we incorporated into the experiment is temptation bundling. By bundling a “want” with a less desirable “should”, studies have shown that increasing the positive valence of the “should” behaviour, such as going to the gym (a should) by watching a favourite TV show (a want), is effective at encouraging exercise. We applied this concept by exposing participants to a message that posed spending as a “want” and saving as a “should”, hoping this framing would have an effect on the amounts of money that participants would choose to spend and save.

In an online experiment we mimicked an online store and tested the effect of nudges on spending.


Our online experiment with 585 European participants was designed to mimic an online store in which we examined the effectiveness of different messaging content and timing of the nudges to reduce unnecessary online spending. This study compared the impact of displaying pop-up messages during two time periods: before the participant entered the store or right before they checked the items out. The content of the messages was varied depending on the type of treatment that was randomly assigned. We used two types of messaging types, loss aversion and temptation bundling, and compared the two. This resulted in a total of four treatments that combined the two different timings with the two types of content. The participants were required first to earn €50 of digital currency in an experimental task before they were asked to shop in a mock online store where we observed their behaviour upon encountering the nudges.

Predictions versus outcome

Before engaging in our study, we established three predictions to test; we believed that:

  1. the participants who were exposed to a nudge would spend less money than the control group;
  2. displaying the nudge before the participants entered the shop would be more effective than after they had already placed items into a shopping cart;
  3. bundling the recommendation of saving with the act of purchase would be the most effective messaging content.

Overall, we identified on average that displaying any nudge, regardless of content or timing, reduced online spending behaviour by 12.98% (€4.70). When we explored the impact that timing had on the effectiveness of the message, the pop-ups displayed before the participants browsed the items in the store reduced the amount spent by 17.93% (€6.58) relative to the control group. Contrary to our original prediction that the temptation-bundling content would be more effective at reducing the amount spent, the loss aversion messaging reduced the amount spent by 14.94% (€5.48), compared to the 4.60% (€1.50) reduction that the temptation bundling message produced.

We further showed that by displaying pop-up nudges featuring loss aversion messages to the study participants before they were able to browse the items available in an online store in Treatment 1, the amount spent in the store could be reduced by 23.88% (€8.76). We did not see as much of a reduction in the other individual treatments that combined the timing with content in different ways (Treatments 2, 3, & 4). The combined reduction in spending in the bundling conditions (Treatment 2 & 4) was not as strong as in the loss aversion conditions (Treatment 1 & 3). This may be because the participants did not see the text as a strong and focused enough message, therefore did not feel a need to save in addition to their spending. Lastly, we believe that since the participants had not yet mentally committed to purchasing their items in the pre-shopping conditions (Treatment 1 & 2), they were more willing to follow the messages’ advice and reduce their spending.

Thinking forward  

The results of our experiment demonstrate that it is possible to reduce the average amount of online spending using simple messaging techniques. As implementing digital nudges has a low marginal cost,  these findings may be applied on a larger scale to make people aware of money they are spending and reduce unnecessary purchases in online shopping environments to save money.

Due to the cost-effective nature of this type of intervention, we are interested in  exploring the potential implementation of this messaging framework in additional contexts, such as savings and other behaviour that is conducted in online environments.

Our hope is that these results may begin to assist those with limited ability to manage their personal finances. In light of these findings, we are excited at the impact that these findings may have on changing individuals’ lives for the better.


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