The Influence of Fake News on Consumer Spending in Response to COVID-19
Justin Pomerance, Assistant Professor of Marketing, has a soon-to-be published paper in the Journal of the Association for Consumer Research (JACR) which examines the presence of fake news making COVID-caused uncertainty worse, and that uncertainty increases two opposing spending intentions in consumers: the desire to save money and the desire to spend it on things in order to feel better.
Pomerance, J., Pomerance, Justin, Nicholas Light and Lawrence E. Williams (2021), "In These Uncertain Times: Fake News Amplifies the Desires to Save and Spend in Response to COVID-19," Journal of the Association for Consumer Research (forthcoming).
COVID-19 is changing human history. However, it arrived on the heels of another crisis—fake news. We examine how fake news influences consumers’ spending intentions in response to COVID-19. Across three studies we find that concerns about COVID-19 engender uncertainty, and that exposure to fake news amplifies this effect. This uncertainty increases consumers’ tendency towards two competing goals: compensatory consumption and resource conservation. We present three studies in which we measure consumers’ general preferences (study 1), their specific preferences with respect to buying food at a restaurant (study 2), and their choices when selecting from a meal delivery service (study 3). Our findings have important implications for both marketing practitioners and policy makers, which we discuss throughout.
Globally, COVID-19 has shut down economies and claimed hundreds of thousands of lives. It has changed how we shop and what we buy. Unfortunately, it arrived on the heels of another crisis: the threat of fake news. This research examines how the ‘double-whammy’ of COVID-19 and fake news influences people’s desires to spend and save. It finds that COVID-19 creates uncertainty—and that fake news makes that uncertainty even worse. This uncertainty increases two seemingly contradictory desires: a goal to save money, and a desire to spend money on things that make us feel better. This pattern is particularly strong among relatively wealthy consumers. These findings matter for businesses, policymakers, and consumers themselves. Despite widespread economic contraction, it is important for businesses to recognize that people continue to open their wallets for specific purchases. Companies can capitalize on this either by emphasizing how they can help consumers save money, or by showing how their brand might provide some stress relief. Policymakers can look for ways to discourage low-income consumers from overspending when they feel the stress and uncertainty caused by the dual threats of the pandemic and fake news, but they can also nudge high-income consumers to channel their increased spending to stimulate the economy. And finally, consumers should be aware of how these conflicting desires to save more and spend more result from feeling uncertain. Doing so could help them be more responsible spenders, saving when they can but indulging in a little retail therapy when they must.