Ep. 211 – Dr. Michael Barbera – Understanding Costco Therapy and the Psychology Behind Our Spending Habits
Have you ever wondered why you buy what you buy? There are so many reasons under the surface for our purchases from social status to taking care of our future selves.
I have the perfect guest to help break down these spending thoughts for us. Dr. Michael Barbera, associate professor of marketing at the University of North Carolina at Pembroke, explores the fascinating world of "Costco therapy" and the deeper psychology behind our shopping habits.
Mike and I delve into what truly drives us to fill our carts—not just at Costco, but at big-box stores everywhere—and how the thrill of discovery, exclusivity, and even our future selves influence the decisions we make every time we shop.
You'll also hear about how brands use subtle psychological tactics—think those rotating aisles, shiny new objects, and exclusive memberships—to keep us coming back for more. The conversation covers everything from customer loyalty, subscription traps, and the emotional calculus behind "saving money," to the powerful role of social media and the human urge to keep up with the Joneses.
Please enjoy my conversation with Dr. Michael Barbera.
Connect with Paul
Contact Paul here or schedule a time to meet with Paul here.
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And feel free to email Paul at pfenner@tammacapital.com with any feedback, questions, or ideas for future guests and topics.
ADDITIONAL RESOURCES YOU MAY LIKE
1 Big Idea to Think About
Our spending decisions are often driven more by emotion and the desire for new experiences or social status than by actual need, and that retail environments like Costco are intentionally designed to enhance these emotional triggers—making us feel good about our purchases and encouraging repeat behavior.
1 Way You Can Apply This
To make your shopping habits more intentional and aligned with your financial goals, be mindful of the emotional drivers behind retail therapy—such as the excitement of discovering new items or the feeling of exclusivity from memberships. Before making a purchase, pause to consider whether the item satisfies a genuine need or is simply providing a temporary emotional boost, helping you enjoy the experience while staying conscious of your long-term well-being and spending priorities.
1 Question to Ask
Am I making spending decisions based on what I truly need, or am I being influenced by the excitement of new experiences, social status, or the desire to treat my 'future self' differently?
Key Moments From the Show
00:01 Paul shares his personal connection to North Carolina and Costco, setting the stage for the Costco therapy discussion.
00:54 Dr. Barbera introduces the concept of retail therapy, distinguishing between utilitarian purchases versus experiential ones.
04:46 The lure of big box stores—Costco’s rotating inventory adds excitement and uncertainty to shopping.
07:43 Costco therapy versus traditional retail therapy: the sunk cost of membership makes big box shopping feel exclusive.
09:19 Social status as motivation—people wear their loyalty status (e.g., Delta badges) as a badge of honor.
11:32 Breaking down customer lifetime value: why small, regular purchases add up and seem painless.
13:43 The psychology of subscriptions—people pay for future versions of themselves, rarely cancel due to friction.
15:14 Consumers make choices for their future self, emotionally aligning current spending with the person they want to be.
16:47 Why three pricing options work best—anchoring and the decoy effect drive consumer decisions.
18:53 Anchoring in retail: premium items set expectations, making mid-tier options look reasonable.
21:00 SMART goals and sustainable change—Dr. Barbera on achieving future self-harmony through attainable benchmarks.
23:08 Cash versus cards—frictionless spending leads to higher outlays, cash curbs overspending.
24:35 Savings psychology—framing purchases as savings leverages loss aversion and hides true spending.
26:25 The addictive cycle of shopping—the thrill of the ‘new’ fuels repeat purchases, just like any other high.
29:10 More expensive = more emotional safety—higher price can feel “safer” in some buying scenarios.
32:56 The danger of being “nickeled and dimed”—how frequent small costs shorten positive customer experiences and reduce long-term loyalty.
34:45 Social media’s impact—seeing others succeed or splurge triggers “keeping up with the Joneses” and influences buying behavior.
35:22 Social proof as persuasion—the power of seeing others do or buy the same things.
37:25 Dr. Barbera’s career path—from teen entrepreneur to expert in behavioral economics by accident.
38:15 Teaching the next generation—Dr. Barbera shares his classes and goals for preparing students to impact their future professions.
40:05 Favorite perks of being a marketing professor—helping shape young adults and geeking out over real-world marketing tactics.
41:17 How to connect with Dr. Barbera—for listeners interested in consumer psychology and behavioral economics.