The effects of psychological threats on consumer behaviour

By Michael Baidu

The effects of psychological threats resulting from hurricanes, earthquakes, tornadoes and mass shootings on the spending behaviour of consumers have been investigated in New Orleans, Houston, Orlando, Charleston, San Diego and Las Vegas.  

Project overview 

Natural disasters and other traumatic events can have significant impact on people's psychological well-being (Becker, 1973). This can lead to a variety of negative consequences, including anxiety, depression, post-traumatic stress disorder (PTSD), and grief. These psychological threats can also have a major impact on consumer behaviour (Maheswaran & Agrawal, 2004). For example, people who have been exposed to a natural disaster may be more likely to spend money on necessities, such as food and water. They may also be more likely to make impulse purchases, as a way to cope with their stress and anxiety. However, research is not conclusive on this. For instance, past research shows that people who have been exposed to a traumatic event may be more likely to avoid certain products or brands, if they remind them of the event (Hesham et al. 2021; Song et al. 2020; PTSD UK. 2022). In line with this, recent studies have revealed that, anxiety and COVID-related fear are associated with an increased need to buy necessities, such as food and medicine (Crosta et al. 2021; Haktanir et al., 2022). Stress has been associated with a decrease in spending, both on necessities and non-necessities and depressive state also associated with an increased need to buy both necessities and non-necessities (Misra et al., 2001; Crosta et al. 2021).  

Justification of study: The occurrence of natural disasters these past few months (e.g., fires and floods in Europe throughout the summer of 2023, disasters in South America in August-September 2023, the earthquake in Morocco in September 2023) rises a red flag on the behaviour of individuals as a result of those, especially given the association of psychological threats and significant changes in consumer behaviour which manifested in the form of panic buying fuelled by factors such as fear, anxiety and depression (Argyropoulou et al. 2023; Crosta et al., 2021). This has heightened the need to investigate in detail the effects of different sources of psychological threats on the spending behaviour of consumers from different cities and ethnicities.  Three main research questions are therefore addressed in this study:  

1. How does the effect of psychologically threatening event affect consumer behaviour in the short-term?  

1. What are the specific consumption patterns that change following an exposure to a psychologically threatening event? 

1. How do demographic factors such as race influence the effects of psychologically threatening event on consumer behaviour?  

Data and methods  

The Nielsen Consumer panel data was used for this study. The Nielsen consumer panel data is a longitudinal dataset that provides information about the purchasing behaviour of consumers in the United States. It is widely used by research scientists, businesses and marketers in the investigation of market trends, consumer psychology and preferences.  

In this study the Nielsen consumer panel data is used over New Orleans, Houston, Orlando, San Diego, Charleston and Las Vegas for the periods, 2005, 2017, 2016, 2004, 2014 and 2017 respectively. This was with the aim of investigating the effect of the Hurricane Katrina in New Orleans in 2005, Hurricane Harvey in Houston in 2017, the Orlando mass shooting in 2016, the magnitude 6.7 earthquake affecting San Diego in 2004, the series of tornadoes in Charleston in 2014 and the Las Vegas mass shooting in 2017.   

Key findings  

PSYCHOLOGICAL THREAT ON TOTAL AMOUNT SPENT   

The changes in the average total amount spent was first investigated for the different events and associated cities. The average total amount spent in each month of the event year was calculated for the corresponding city by summing and averaging the total amount spent by families and individuals within each month. The results of the analyses suggests that, the total amount spent increased after the event in almost all the cities studied. There was a significant increase a month after Hurricane Katrina in New Orleans from about $78000 to $95000 (Figure 1). A significant increase was also seen in Houston after Hurricane Harvey from about $91000 to $101000 (Figure S1).  

A relatively lower difference with an average change in total amount spent of about $5000 was seen after the Orlando mass shooting in 2016, San Diego earthquake in 2004, the series of tornadoes in Charleston in 2014 and the Las Vegas mass shooting in 2017 (Figures S3, S5, S7 and S9).  

VARIATIONS IN THE TOTAL AMOUNT SPENT BY RACE 

A further investigation was performed to access whether the relationship between psychological threats and the total amount spent varied by race. Each event and its corresponding city was further divided according to the different races: Asians, Black or African Americans, Hispanics or Latinos and Whites.  

The increase in total amount spent after the 2005 Hurricane Katrina event in New Orleans was also seen amongst Asians, Blacks or African Americans and Whites. This increase however wasn’t immediately seen among the Hispanics or Latinos (Figure 2).  

The increase in the total amount spent after the remaining events was mostly seen amongst the different races but it was more consistent amongst whites for all events.  

Amongst Asians, the increase in the total amount spent following a psychologically threatening event was seen during all the events except for the 2004 earthquake in San Diego and the mass shooting in Las Vegas in 2017. 

Blacks or African Americans also spent more after the psychologically threatening events except after the San Diego earthquake, the Las Vegas mass shooting and the tornadoes in Charleston where the increase in spending occurred after a month.  

Amongst Hispanics or Latinos, increase in spending after a psychologically threatening event was only significantly seen after the Hurricane Harvey in 2017 at Houston. The rest of the events didn’t result in an immediate increase in spending amongst Hispanics or Latinos (Figures S2, S4, S6, S8 and S10).  

 

 EFFECTS OF PSYCHOLOGICAL THREATS ON CONSUMER CHOICES 

Finally the effects of psychologically threatening events on consumer choices was finally investigated by accessing the changes in the total number of beer, cigarettes and tobaccos purchased. This was investigated by counting and comparing the number of beer, cigarette or tobacco purchased two months before and after each event. Figure 3 shows the result of the effect of the 2017 Hurricane Harvey in Houston.  

For most of the events and corresponding cities the effect of the psychologically threating event resulted in a decrease in the number of beer or cigarette and tobacco purchased. This was seen in Houston after Hurricane Harvey in 2017 (Figure 3), Las Vegas after the mass shooting in 2017 and San Diego after the earthquake in 2004 (Figures S11 & S12). This seems to support earlier work which suggests that the exposure to psychologically threatening events makes individuals more conscious of their motility and hence make more careful life choices (Greenberg et al., 1997). 

The series of tornadoes in Charleston in 2014 however resulted in an increase in the number of tobaccos purchased (Figure S13).  

Value of the research  

The Nielsen consumer panel data was used to investigate the effects of psychological threats on consumer behaviour by addressing 3 main objectives. These objectives were to access how psychologically threatening events affects consumer behaviour in the short term, how this effect varies across different races and the differences in life’s choices of individuals who have experienced a psychologically threatening event.  

Insights 

• Psychologically threatening events resulted in increased spending in almost all the investigated cities in the short term.  
• The consumption of cigarettes and other tobacco products generally decreased in most places after an exposure to a psychologically threatening event. This supports earlier works which suggests that the exposure to psychologically threatening events makes individuals more conscious of their motility and hence make more careful life choices (Greenberg et al., 1997).  
• The increase in the total amount spent following a psychologically threatening event was mostly seen amongst the different races but it was more consistent amongst whites for all events.  
• Amongst Asians, Black or African Americans and Hispanics, the response to a psychologically threatening event did not immediately result in a significant increased spending for some cases. 

 Limitations 

• A comprehensive investigation was unfeasible due to the constraints of both time and computing power required to handle the extensive dataset. 
• The influence of other demographic factors such as age, income and education could not be investigated due to the limitation of time. It is recommended that these factors are investigated in future research.  
• A more thorough investigation could not be performed for the assessment of the impact of psychologically threatening events on consumer choices because the resulting sample size for products such as beer, cigarette, tobacco, gin and vodka was too low for a statistically significant result.  

 Research theme 

• Societies 

Programme theme  

• Statistical Data Science 

 People 

Dr Aulona Ulqinaku, Associate Professor of Marketing, Marketing Department, University of Leeds.   

 Funders 

This project was funded by the Consumer Data Research Centre (CDRC), an ESRC Data Investment. Funding references ES/L011840/1; ES/L011891/1.  

 References 

Argyropoulou, M., Tzavara, D. and Argyropoulou, R., 2023. Exploring How the Covid-19 Pandemic has Changed Greek Consumers' Habits. KnE Social Sciences, pp.61-72. 

 Becker, E., 1997. The denial of death. Simon and Schuster. 

 Di Crosta, A., Ceccato, I., Marchetti, D., La Malva, P., Maiella, R., Cannito, L., Cipi, M., Mammarella, N., Palumbo, R., Verrocchio, M.C. and Palumbo, R., 2021. 

Greenberg, J., Solomon, S. and Pyszczynski, T., 1997. Terror management theory of self-esteem and cultural worldviews: Empirical assessments and conceptual refinements. In Advances in experimental social psychology (Vol. 29, pp. 61-139). Academic Press. 

Haktanir, A., Seki, T. and Dilmaç, B., 2022. Adaptation and evaluation of Turkish version of the fear of COVID-19 scale. Death studies, 46(3), pp.719-727. 

Hesham F, Riadh H, Sihem NK. What have we learned about the effects of the COVID-19 pandemic on consumer behavior? Sustainability. 2021;13(8):4304. 

Maheswaran, D. and Agrawal, N., 2004. Motivational and cultural variations in mortality salience effects: Contemplations on terror management theory and consumer behavior. Journal of Consumer Psychology, 14(3), pp.213-218. 

Misra, D.P., O'Campo, P. and Strobino, D., 2001. Testing a sociomedical model for preterm delivery. Paediatric and perinatal epidemiology, 15(2), pp.110-122. 

PTSD UK. (2022, September). Understanding PTSD Flashbacks and Triggers. Retrieved from https://www.ptsduk.org/what-is-ptsd/understanding-ptsd-flashbacks-and-triggers/ 

Song W, Jin X, Gao J, Zhao T. Will buying follow others ease their threat of death? An analysis of consumer data during the period of COVID-19 in China. International Journal of Environmental Research and Public Health. 2020;17(9):3215