Why do you buy the things you buy?

Here’s a hypothetical situation: you need to buy a blender. You don’t own a blender and frankly, you don’t really know what kind of blender you need. You’re not really sure where blender technology currently stands, you just know that you need one.

So you arrive at the store and they have two kinds of blenders. One is $20. The other is $40.

Which one are you buying? The answer says a lot about how price impacts your perceptions of quality and value.

According to a 2012 study published in the Journal of Consumer Research, when attempting to make purchasing decisions consumers very often rely on what researchers term naïve theories. Because consumers don’t have all the information necessary to decide conclusively which item represents the highest value, they have to fill in their knowledge gaps with these naïve theories - “informal, common sense explanations that consumers use to make sense of their environment.”

When trying to decide between the $20 blender and the $40 blender, our personal naïve theories may convince us that the $20 blender is the better value. After all, it’s half the price and there’s no way it’s only half as good as the other blender.

But – what if only the year before you’d faced a similar conundrum regarding two toasters? And in that circumstance you’d chosen the cheaper toaster only to have it break on you a few months later? Chances are good you’d be more inclined to think that the cheaper blender was inferior and not a good value.

This is why two people in similar financial situations faced with the same choice will often make different decisions. You use your prior experiences to fill in the gaps. The trouble is that the assumptions you make in filling those gaps may not be entirely accurate, leading you to overspend on certain items or waste money on shoddy merchandise.

What can you do to avoid being misled by your naïve theories?


There’s more information floating around on the internet than you or I can possibly fathom. And in amongst all that information is the key to making good money choices. Take the time to research. Read reviews online and gauge user opinions. Just because you’re not buying something huge doesn’t mean it isn’t worth your time to investigate your options. The more you know, the smaller those knowledge gaps become and the less you have to fill them with unreliable naïve theories.

Remove yourself from the equation

If you don’t have the ability to easily access product reviews, simply change your perspective on the situation by pretending that you’re buying a gift for someone else rather than yourself. This helps you reduce the immediate connection between price and quality. Theoretically, (unless you leave the price tag on) your friend won’t know what the item cost (nor will they know where it falls on the scale of available options). This allows you focus on the quality (separate from price) and then decide if that item fits your needs and your budget.

A lot of sub-conscious stuff goes on when we start making decisions. Don't let your naïve theories cost you money or saddle you with less-than-amazing purchases.

How about you? What tricks do you use to help ensure that you're getting the most value out of your money?

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.