Grasping The Mind of a Shopaholic

Abstract

This paper attempts at studying the phenomenon of excessive indulgence in shopping. While the act of shopping might be considered a normal activity, being a shopaholic tr ansgresses what can be understood as ‘normal’. Our research begins by defining shopaholics and contrasts their behaviour with regular shoppers by studying differences in the utilities each type of consumer gains from the act of shopping. Opportunity costs of shopping between those two groups of shoppers are also discussed followed by a brief examination of how sh opaholic behaviour might play in role in the practice of price discrimination by retailers. We end our paper with a di scussion of the market failure caused by shopaholics, and some possible interventions by government. Defining Shopaholics Shopaholics are compulsive shoppers who derive a significant amou nt of utility from engaging in the act of shopping. This behaviour is a form of addiction because shopaholics have a compulsion to shop, they are unable to stop and are prone to continue even if it brings about adverse consequences such as debts, hoarding and failed relationships. According to Koob & Moal (2008), the motivation that changes regular consumption to addiction is the temporary happiness gained as a result of certain hormones produced. Be cker & Murphy (1988) also showed increased possibilities for addiction when rise in past cons umptions has a positive correlation with current consumption. At the same time, they conclude that addictions also involv e interaction between an addict and the goods. Regular shoppers will transfor m into shopaholics when they derive additional utility from the momentary lift in their mood and then become comp elled to replicate that feeling in the longer term. DPIBE, July 2011 Shopaholic Chhavniwala et. al. 2 Motivation Utility is the benefit or fulfilment that a person receives from consuming goods or services. The assumption in consumer theory is that rational consumers seek to seek to maximise their utility and are constrained by scar city of their resources. We shall assume that regular shoppers derive utility from the consumption of the goods and services they desire but do not add to their utility by engaging in the act of shopping. Further, we assume that a shopper’s opportunity cost relies on two variables – posted price and search cost.