The price of a threat: how social identity threat influences price sensitivity

Abstract

Traditional economic theory suggests that poor consumers are consistently more price sensitive than their wealthier counterparts. Recent research, however, indicates that various economic-related burdens, such as the cost of mobility, hinder low-income individuals from attending to scarcity. In the current article, we extend these findings by demonstrating that even when poor consumers can exert price sensitivity, they often choose not to do so in a systematic attempt to circumvent marketplace social identity threats (SITs). Across four experiments, we showed that to avoid intergroup contact in commercial settings, identity-vulnerable (i.e., poor) consumers were willing to pay a higher price for both products and services and accepted lower-value rewards when compared to identity-guarded (i.e., wealthy) consumers. Whereas mediation analysis showed that identity-vulnerable individuals were less price sensitive due to a higher anticipated prejudice, moderation models demonstrated that this effect was contingent on the consumers’ level of collective self-esteem, as well as on the shopping channel. Implications for the SIT and the scarcity literatures are discussed.