Float Former Poor Up Over a Sunk Cost Fallacy

Being raised poor affects an adult’s consumer habits in the face of uncertainty. In some cases, the behaviors are exactly what we’d expect: Such adults are more likely to stockpile items if possible, since they fear deprivation. The long-term poor often will give promotional discounts extra attention.
     In other cases, low childhood socioeconomic status exaggerates trends which are seen in all adults: For instance, when the security of a consumer of any age is threatened, their consumption habits move toward the repetitive. But this is especially true if the adult consumer was raised poor.
     In still other cases, the results may seem surprising: Individuals who have grown up in resource-scarce families are less interested as adults in health care insurance than are individuals who grew up with ample money. The researchers’ explanation is that people raised poor are accustomed to living with risk.
     Studies at University of Central Arkansas, Auckland University of Technology, Peking University, and Florida International University add to this list a propensity for the sunk cost fallacy, which refers to staying the course even when the course is unpromising. Here, the researchers’ explanation is that, on average, people with a history of low socioeconomic status consider loss of prior investments to be more wasteful than do their counterparts raised wealthy.
     The sunk cost fallacy is more common with group decision making. So are these two:
     Planning fallacy: Groups are worse than individuals in underestimating the time, money, and staff projects will take.
     Framing effects: Group members come to depend on each other to do the critical thinking, meaning that the critical thinking is inadequate. As a result, the manner in which the facts are framed makes too much of a difference. A group will be more likely to agree to a change if told it has a 90% chance of success than if told it has a 10% chance of failure.
     You’ll never want to discriminate against financially-strained shoppers or in other ways make conclusive judgments about their shopping habits without sufficient evidence. At worst, such discrimination becomes retail redlining, which occurs when disenfranchised groups of consumers systematically receive lower quality goods and/or are charged higher prices for equivalent merchandise than is true for other groups.
     Still, if you learn that an individual customer or family of customers was raised poor or is poor, be alert to how this can distort the wisdom of their current purchase decisions.

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Pattern Choices for Frightened Shoppers 

Agitate Stable Blindness 

Validate Vulnerable Consumers 

Identify Influencers in Family Decision Making 

Reexamine Retail Redlining Temptations