When Paying Is (Even More) Painful: Personality-Based Heterogeneity in Consumption Responses to Economic Hardship

Economic downturns lead to declining consumer spending, but people vary considerably in their consumption responses. We investigate an important driver of this heterogeneity, personality. Trait level variation has been observed in the levels of psychological discomfort when making a purchase (“the pain of paying”). We test whether individuals who experience more pain when paying are not only reluctant spenders in general but also decrease spending more sharply when experiencing economic hardship, indicating an increased “pain sensitivity.” Evidence from a two-wave online survey ( N = 942), a representative longitudinal database ( N = 3,181) and a cross-national survey ( N=11,972) converge to support the hypothesis that the pain of paying moderates the relationship between economic hardship and spending. Our findings provide evidence that personality can shape people’s responses to economic downturns and indicate the potential role of psychology-based interventions in macro-economic policy.