AS Inc/ShutterstockEveryone fantasizes about winning the lottery or signing that multi-million-dollar contract, but not everyone who gets that money goes seemingly off the deep end, splurging on fast cars, designer duds, and fancy watches, as opposed to maybe socking money away for their kids’ college education or investing in stocks? (By the way, here’s how to look expensive without shelling out on a whole new wardrobe.)
When it comes to football stars, rappers, and CEOs, you might think the impulse to spend, spend, spend comes from elevated levels of testosterone, which have been associated with more dominant and aggressive behavior in men. It’s also been suggested that levels of the hormone rise when an individual wins a competition, and fall when they lose.
But new research shows that what drives people, men especially, to buy luxury items is not high levels of testosterone but feeling like a “winner.”
A study led by Yin Wu, former PhD student at the University of Cambridge and now based at Shenzhen University in China, together with researchers from London Business School, University of Oxford, and University of Vienna, investigated the effects of social status and testosterone levels on conspicuous consumption (buying expensive items to display wealth and income rather than meet actual needs).
Wu tested the effects of winning or losing a competitive version of the game Tetris on the behavior and testosterone levels of 166 male volunteers. The participants thought they were competing against one another in two-player games, but actually they were randomly classed as winners or losers.
Following the game, the men were asked how much they would be willing to pay for luxury items and asked to attribute positive and negative words to the items. Their testosterone levels were also measured.
According to the findings, published in the journal Scientific Reports, winners were more likely to pay a higher price for luxury items than losers, and they attached greater value to those items than the losers did. However, winning and losing had no discernible effect on testosterone levels, suggesting that testosterone does not play a role in conspicuous consumption.
“Social competition is pervasive in our daily life—whether it is in terms of fighting for the top job, competing for friends and popularity, or even growing up in a wealthy, successful family,” explains Wu, as reported on ScienceDaily. “Our study demonstrates that winning a competition leads people to prefer high-status products, possibly through an increased feeling of entitlement or deservingness.”
If you want to save more than you spend, check out the good money habits of people who are great at building a nest egg.