The Bottom Dollar Effect: How Resource Availability Influences Perceived Value and Satisfaction

Mental accounting research suggests that pain of payment attenuates the pleasure of consumption and that consumers with depleted resources think about costs differently. The present research finds that, when consumers spend their last available resources (i.e., spend to zero), the perceived value of purchases decreases and satisfaction is attenuated. Recent research has shown a number of ways in which depleting resources influence consumers’ spending decisions (Brady 2009; Huffman and Barenstein 2005; Kamakura and Du 2012; Mishra, Mishra, and Nayakankuppam 2010; Stilley, Inman, and Wakefield 2010a). For example, consumers tend to choose more prevention-oriented products as more time passes since their last paycheck, and they are more likely to choose products that are scarce when they feel financially deprived compared to others (Mishra et al. 2012; Sharma and Alter 2012). Findings also suggest that consumers spend differently, such as spending less on non-essential products during times of both macroeconomic contraction (Kamakura and Du 2012) and personal economic contraction (Brady 2009; Huffman and Barenstein 2005). Other research suggests that consumers think about both expenditures and opportunity costs differently, depending on the amount of resources at their disposal (Morewedge, Holtzman, and Epley 2007; Spiller 2011). Although it seems likely that these patterns of spending might influence consumer financial and material well-being, researchers have yet to examine whether they have implications for consumers’ satisfaction with the products that they do end up purchasing. We extend the above findings relating to resource availability by considering how the state of consumers’ resources at the moment of purchase influences not only the consideration of costs, but also post-purchase satisfaction. We hypothesize that consumers are less satisfied with products and services when the purchase itself has “zeroed out” or exhausted a budget compared to when funds remain in a budget after a purchase. Specifically, we propose that, when consumers incur costs that exhaust their budgets (i.e., spend their bottom dollar), the marginal utility of those spent resources is significantly greater than economically equivalent costs that merely reduce budgets (i.e., non-bottom dollar spending). According to both the mental accounting literature (Prelec and Loewenstein 1998) and the value perspective of satisfaction (Johnson, Anderson, and Fornell 1995), these differences in the perceived cost of the resources spent should influence satisfaction.