How do our sentimental feelings for the past influence our actions in the present?

 

Nostalgia Effect

, explained.

What is the Nostalgia Effect?

Feelings of nostalgia, or sentimentality for days gone by, lead us to place increased value on social connectedness and less value on saving money. Nostalgia’s influence over our willingness to spend money is referred to as the nostalgia effect.

Where this bias occurs

Alex is being careful with their money and is working towards their long-term goals of buying a house, having a nice car, and living a comfortable lifestyle. They are avoiding spending money on anything that isn’t essential. Then, one day, Alex is watching television and sees an advertisement that depicts a family on vacation at a national park. They’re shown hiking beautiful trails, swimming in lakes, and laughing together over dinner back at their hotel. This commercial takes Alex back to their childhood, when they used to go on family vacations to national parks. Some of their fondest memories are of exploring the trails with their siblings. Suddenly, Alex has the urge to plan a vacation with their friends. They could rent a cottage and spend the weekend hiking, swimming, and enjoying each other’s company. After all, Alex reasons, it’s more important to make memories than it is to save money. In this case, the nostalgia Alex experienced while watching the commercial depicting a family vacation made them more willing to spend money in the name of social connectedness, despite the fact that they had been being very mindful of their spending.

Individual effects

By definition, the nostalgia effect makes us more willing to spend money. This can be problematic if we, like Alex in the aforementioned example, are attempting to save up. Before making an impulse purchase, consider whether or not it’s something you would spend your money on if you hadn’t been basking in the glow of nostalgic memories.

Systemic effects

Companies often use the nostalgic effect to their advantage by advertising their products in a way that elicits nostalgia and makes people more likely to make a purchase. These advertisements can have a wide reach and have the potential to influence many people to buy the product being advertised. Nostalgia is a vital tool wielded by marketing teams and, by using it effectively, they can significantly increase the sales of certain products.

Why it happens

Nostalgia elicits feelings of social connectedness, making us feel as though we have a social network in which we belong. Interestingly, social connectedness decreases our desire for money by making us feel less reliant on it because we are supported by our network of friends and family.1

Nostalgia and social connectedness

Research shows that nostalgia serves to increase feelings of social connectedness. Nostalgic memories often feature significant people in our lives, which makes us feel more strongly connected to our social network. In fact, one study demonstrated that participants tasked with writing about a nostalgic event felt more loved and protected than did participants who wrote about autobiographical events that did not elicit feelings of nostalgia.2

The nostalgia effect occurs through a two-step process. In the first step, nostalgic memories are brought to mind, making us feel more socially connected. The second step involves the interplay between social connectedness and money.

Friends and funds

Money is an important resource that facilitates the satisfaction of our basic needs. However, these needs can also be satisfied if we have a strong social network to support us. For this reason, having lots of money can make social connectedness seem less important, whereas strong social connectedness can make money seem less important. Janinne D. Lasaleta, Constantine Sedikides, and Kathleen D. Vohns published a paper in 2014, titled “Nostalgia Weakens the Desire for Money”. One of their key findings was that we tend to treat money and social connectedness as interchangeable. As such, the feelings of social connectedness fostered by nostalgia make us less inclined to save our money.3

After nostalgic memories have led to an increase in feelings of social connectedness, the second step to give rise to the nostalgia effect occurs. In this step, our desire for money is reduced by our strengthened feelings of social connectedness, making us more willing to spend our money.

Why it is important

Knowing about the nostalgia effect can make us more mindful of our spending. If you’re ever about to make an impulsive purchase, you can stop and ask yourself whether or not it’s something you really want or if it’s just advertised in a way that’s designed to elicit feelings of nostalgia. Avoiding the nostalgia effect can help us make better financial decisions and stick to our budgets.

How to avoid it

If you’re feeling the urge to make an impulse buy, stop and ask yourself why. If you find that whatever it is you’re considering spending money on reminds you of something from your past, you may have fallen prey to the nostalgia effect. If that’s the case, it may be a good idea to put off your purchase until you’ve removed the rose-colored glasses. If you still think the purchase is a good idea when you’re in a less sentimental mood, that’s great. However, if you realize that it’s not something you’re actually willing to spend your money on, you’ll have avoided the regret that may have resulted from making an impulsive purchase while in a nostalgic daze.

How it all started

One of the key pieces of literature on the nostalgia effect comes from Lasaleta et al. Their paper, “Nostalgia Weakens the Desire for Money” (2014)4 presents the results from six studies investigating the ways in which nostalgia impacts the way we value money. They demonstrated that nostalgia increases our willingness to spend money, which serves as evidence for the nostalgia effect. They also found that, while nostalgic participants were willing to give away more money, they were not willing to give away more time, which shows that the nostalgia effect is specific to money. Furthermore, nostalgic participants rated money as less important and less desirable than did participants in the neutral condition. Nostalgic participants were also less inclined to put effort into acquiring money. Finally, they demonstrated that the relationship between nostalgia and a greater willingness to spend depends on increased feelings of social connectedness.

Example 1 - Dictator game

One of the studies conducted by Lasaleta et al. as part of their research into the nostalgia effect is referred to as the “Dictator game”.5 In this experiment, half of the participants were asked to write about a nostalgic memory, while the other half were instructed to write about a neutral, ordinary memory. The participants were then told they were going to partake in a game that was being pilot-tested by the lab. Of course, the lab was not really developing a game; the game was the means through which they were assessing the effects of nostalgia on people’s willingness to give away money or time.

The game was simple. Half the participants were assigned the role of “proposer” and the other half were assigned the role of “receiver”. These roles were determined randomly. The proposers were told that they had nineteen units of either time or money, some of which they had to allocate to a receiver down the hall, the rest of which they could keep for themselves. Proposers in the money condition were given nineteen 25 cent coins, for a total of $4.75. In the time condition, the units of time represented how early they could leave the experiment, with the total amount being nine minutes and thirty seconds – or, 19 units of 30 seconds.

The findings of this study were quite telling. Participants who had recalled a nostalgic memory gave away more money, but not more time, than participants who had recalled a neutral memory. This not only provided support for the nostalgia effect, but it demonstrated that this effect is specific to money; it had no effect on people’s willingness to give away their time.

Example 2 - Nostalgia in marketing

The nostalgia effect tells us that feelings of nostalgia make people more willing to spend money. Naturally, marketing companies have picked up on this and used it to their advantage. Many advertisement campaigns have had great success by using the simple trick of combining something old with something new. Taking something that makes people nostalgic and adding a new, exciting twist to it seems to be the perfect combination for getting people to pull out their wallets.

The prime example of this is Pokémon Go, an augmented reality game that made major waves upon its release in 2016. The game took people’s childhood love of Pokémon and made it new and fresh. It elicited nostalgia but still felt relevant.6 To say the game was popular would be an understatement; it was a cultural phenomenon. The app itself is free, however, there are in-app purchases available. Lasaleta et al. demonstrated that people are more likely to spend money when they are made to feel nostalgic by advertisements7, thus the nostalgia brought on by Pokémon Go may not have only contributed to its downloads, but to the number of in-app purchases made.

Summary

What it is

Reminiscing over the past can increase our willingness to spend money in the present.

Why it happens

A two-step process gives rise to the nostalgia effect. First, nostalgic memories, which often feature ourselves surrounded by friends and family, make us feel more socially connected. Next, those increased feelings of social connectedness make us less concerned with saving money, because we consider money and social connectedness as interchangeable resources for satisfying our basic needs.

Example 1 – Dictator game

Research has shown that people who have recalled a nostalgic memory are more willing to give away money, but not time, than are people who have recalled a neutral memory. This demonstrates that the nostalgia effect is specific to money, and does not generalize to other valuable resources, such as time.

Example 2 – Nostalgia in marketing

Marketing teams often use nostalgia to their advantage. Pokémon Go is the perfect example of a product that combines the old with the new; it brings on feelings of nostalgia while still being new and fresh. It’s possible that the number of in-app purchases made is influenced by the nostalgia effect.

How to avoid it

You can avoid the nostalgia effect by stopping yourself from making impulsive purchases. It’s better to take some time and revisit the possibility of making the purchase later on, to see if it’s something you actually want to buy.

Sources

  1. Lasaleta, J.D., Sedikides, C., and Vohs, K.D. (2014). Nostalgia Weakens the Desire for Money. Journal of Consumer Research. 41(3), 713-729. DOI: 10.1086/677227
  2. See 1
  3. See 1
  4. See 1
  5. See 1
  6. Freidman, L. (2016). Why Nostalgia Marketing Works So Well With Millennials, And How Your Brand Can Benefit. Forbes. https://www.forbes.com/sites/laurenfriedman/2016/08/02/why-nostalgia-marketing-works-so-well-with-millennials-and-how-your-brand-can-benefit/#6f797d336364
  7. See 1