Young Investor

Why we indulge during vacations?

B Venkatesh | Updated on October 08, 2011

Relaxing helps us focus on the satisfaction that we derive from consuming a product.

Consider this. You take a short vacation with your family to a neighbouring city. At the end of two days, your baggage is stuffed — an outcome of your family's shopping splurge. These are the same shops that you pass-by during your frequent business travels to the city! Why do we spend more when we are vacationing? You would have observed that luxury hotels and restaurants have a soothing décor and relaxing music. Research has shown that relaxing the customers helps generate more revenue for the business!

In one experiment, the subjects were divided into two groups. One group listened to relaxing music and related stimuli. The other group listened to pleasant music and related stimuli. Later, the subjects were asked to bid for several products. The group that listened to relaxing music, on average, overbid compared to the street prices! The behaviour was observed across several consumer products.

Focussing on satisfaction

This suggests that we tend to spend more when we are relaxed. And we typically relax when we are on holiday. Hence, we, spend more during such periods. But why do we spend more when we are relaxed? Psychologists argue that relaxing helps focus on the satisfaction that we can derive from consuming a product.

Suppose you are planning a vacation. You are more likely to concentrate on how appealing the destination is if you are relaxed. You are, however, likely to evaluate the vacation based on its feasibility, the timing of the vacation and the cost of travel, if you are less relaxed. Relaxing, perhaps, triggers the excitement of consuming a product or service and numbs the pain of paying for it. You are, hence, more likely to make large impulse purchases when you are on vacation. This suggests that decision making is like a catch-22 situation. We often tend to make incorrect decisions under stress. And if psychologists' argument is anything to go by, we are likely to indulge or assign higher monetary value to our purchases when we are relaxed!

(The author is the founder of Navera Consulting. He can be reached at >

Published on October 08, 2011

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