Research & Ideas
What effect does luxury have on human cognition and decision
making? According to new research, there seems to be a link between
luxury and self interest, an insight that may help curb corporate
excesses. Roy Y.J. Chua of Harvard Business School
discusses findings from his work conducted with Xi
Zou of London Business School. Key concepts include:
Roy Chua is an assistant professor in the Organizational
Behavior unit at Harvard Business School.
Are people who travel in town cars and on corporate jets
different—on a psychological level—from you and me? Does the
availability of luxury goods "prime" individuals to be less
concerned about or considerate toward others? The answer from new
research seems to be yes.
HBS professor Roy Y.J. Chua and Xi Zou, an assistant professor
at London Business School, suggest that luxury goods have an
important effect on human behavior that is only now becoming
clear—and that may have implications for addressing the
continuation of objectionable choices among, for example,
high-flying executives on Wall Street.
According to Chua, their research found that "people who were
made to think about luxury prior to a decision-making task have a
higher tendency to endorse self-interested decisions that might
potentially harm others." Their findings are detailed in the HBS
working paper "The Devil Wears Prada? Effects of Exposure to Luxury
Goods on Cognition and Decision Making" [PDF].
"Will the same business meeting reach different decisions when
it is held at a luxury resort as opposed to a modest conference
room?" the authors write. "Will CEOs who bequeath themselves
expensive office facilities and luxurious corporate jets make
different business decisions than those who do not? In this age of
Wall Street excesses, these are pertinent questions that could
further our understanding of why some [people] continue to place
their own interests over others', even in difficult economic
times."
Chua, whose research draws on human psychology to better
understand important social processes in business organizations,
explained more about the findings in an e-mail Q&A.
Sarah Jane Gilbert: You conducted two
experiments to explore a psychological link between the notion of
luxury and self-interest. What did you find?
Roy Chua: In the first experiment, participants
were asked to answer a series of business-related decision-making
questions that were designed to tap the extent to which people
place self-interests (profit maximization for one's firm) above
society interests. An example involved asking participants how
likely they are to endorse the manufacturing of a new model of car
that could bring in enormous profit but could potentially pollute
the environment. Before answering these questions, half of the
participants were asked to evaluate luxury products, while the
other half evaluated cheaper equivalents. We found that people who
were made to think about luxury prior to the decision-making task
have a higher tendency to endorse self-interested decisions that
might potentially harm others.
These results led us to wonder whether "luxury-primed"
individuals are simply self-interested or are indeed more prone to
harm others. Thus, we conducted a second experiment that was
similar to the first one in that the participants were either
primed with luxury or not. The difference is that after the prime,
we asked them to do a word recognition exercise. The task was to
write down the first word that came to their mind when given a
string of scrambled letters. These strings of scrambled letters
were each constructed by interleaving a pro-social word with an
anti-social word of equal length. Examples of the pro-social words
used were nice, giving, and helpful; examples of anti-social words
were rude, stingy, and selfish. We found that luxury-primed
participants identified significantly fewer pro-social words than
non-luxury-primed participants. However, there was no significant
difference in the identification of anti-social words.
This pattern of findings suggests that luxury-primed individuals
were not more likely to have anti-social cognition, but
were less likely to have pro-social thoughts. In other
words, when thinking about luxury, people tend to focus more on
themselves and less on others.
Q: Did anything in your research
surprise you?
A: The findings are not so much surprising as
illuminating. We expected a relationship between luxury and
self-interests. However, self-interested behaviors are often
conflated with those that do harm to others (e.g., selling
low-quality products that might be harmful to consumers). Our
second study to some extent clarifies the psychological dynamics
that arise from luxury.
Luxury does not necessarily induce one to do harm to others, but
simply causes one to be less concerned or considerate toward
them.
Q: How do your findings help us to
understand corporate greed? Do you think there is a different
mindset now for companies and executives to change and become more
socially and morally responsible?
A: In the midst of the current global economic
crisis, people are outraged by highly paid executives living in the
lap of luxury while continuing to make self-serving decisions and
ignoring the plight of others. To date, more than a year since the
crisis started, despite much public outrage and threats to more
strongly regulate the financial industry, there do not seem to be
any substantive changes in their mindset. Bankers are still
planning large bonuses for themselves.
One commonly proffered explanation is that these executives lack
a moral compass, leading them to care only about themselves to the
extent of hurting others. Our findings offer another
perspective—the fact that these executives are surrounded by luxury
did not help their decision-making to be more "other-oriented." Yet
their seemingly "immoral" decisions stem not so much from a real
desire to hurt others but more from over self-indulgence.
Perhaps besides limiting the size of bonuses, limiting corporate
excesses and luxuries might be a step toward getting executives to
behave more responsibly.
Q: Since your research is work in
progress, do you have plans to expand your study to uncover
additional findings? What would you include in future studies?
A: Yes, this is still very much work in
progress. While our findings established the effects of exposure to
luxury, we believe more work is required. Future research should
tease out the nuances in the psychological effects of "luxury
prime" (which we have shown to promote self-interest) and "money
prime" (which has been shown to promote self-sufficiency and
independence).
Toward this end, Xi Zou and I have recently completed a new
study in which participants tested perfumes as part of an
ostensible marketing research project. Participants were divided
into two groups: In the first group, participants read about
perfumes as luxury products, and in the second group, participants
read about perfumes as becoming daily necessities. Both groups
tested the same perfumes. We found that luxury-primed participants
behaved in a more self-interested manner in that they were less
likely to make contributions toward the public good. Priming luxury
did not have any effect on self-sufficiency measures, suggesting
that priming luxury is different from priming money.
Future research should also examine the mechanisms through which
luxury goods activate self-interests. We posit that several
potential mechanisms may be involved in the process. Exposure to
luxury goods may activate a social norm that it is appropriate to
pursue interests beyond a basic comfort level, even at the expense
of others. It may be this activated social norm affects people's
judgment and decision-making. Alternatively, exposure to luxury may
directly increase people's personal desire, causing them to focus
on their own benefits such as prioritizing profits over social
responsibilities.
Although these two mechanisms lead to the same observed results,
they have distinct social implications. As social scientists, we
think it is important to understand the "why" beneath the effects
we found, and so we are currently planning more studies.