Cultural Differences in Opportunity Cost Consideration.

Ning Zhang,Ye Li,Li-Jun Ji

doi:10.3389/fpsyg.2017.00045

Abstract

Two studies were conducted to investigate cultural differences in opportunity cost consideration between Chinese and Euro-Canadians. Opportunity cost is defined as the cost of a benefit that must be forgone in order to pursue a better alternative (Becker et al., 1974). In both studies, participants read about hypothetical purchase scenarios, and then decided whether they would buy a certain product. Opportunity cost consideration was measured in two ways: (1) participants' thoughts pertaining to other (nonfocal) products while making decisions; (2) participants' decisions not to buy a focal product (Study 1) or a more expensive product (Study 2). Across both indexes, we found that after controlling for individual difference variables and amount of pocket money, Chinese participants in China considered financial opportunity cost more than Euro-Canadians in Study 1. Similar results were observed in Study 2 when comparing Chinese in Canada with Euro-Canadians However, the cultural effect on opportunity cost consideration was confounded by family income in Study 2. Implications for resource management, limitations of the current research and directions for future research are discussed.

Highlights

Will you choose to buy a luxury stereo system with your $2000 holiday bonus or spend the money on a wonderful holiday at a Caribbean island resort? Though this may seem to be an easy decision at first glance, you may hesitate before making one choice and forgoing the alternative
We explored cultural differences in opportunity cost consideration between Chinese and Euro-Canadians while controlling for individual difference variables such as selfreported habit of opportunity cost consideration (OCC; Spiller, 2011), propensity to plan for money (PPM; Lynch et al, 2010), and difficulty of spending or controlling spending (STS; Rick et al, 2008), in order to see whether cultural differences exist beyond these individual difference variables
The self-reported individual difference variables indicated that Euro-Canadians (M = 5.01, SD = 1.32) reported a stronger habit of considering opportunity cost than did Chinese (M = 3.98, SD = 1.48), t(238) = 5.74, p < 0.001; Euro-Canadians (M = 4.43, SD = 1.44) reported a significantly higher propensity to plan for money than did Chinese (M = 3.22, SD = 1.25), t(238) = 6.97, p < 0.001

Summary

Introduction

Will you choose to buy a luxury stereo system with your $2000 holiday bonus or spend the money on a wonderful holiday at a Caribbean island resort? Though this may seem to be an easy decision at first glance, you may hesitate before making one choice and forgoing the alternative. In one study, half of the participants chose between the options “buy this entertainment video” and “not buy this entertainment video” (control condition); the other half of the participants chose between “buy this entertainment video” and “keep the money for other purchases” (opportunity cost salient condition). They found that participants in the control condition were more likely to buy the entertainment video than were participants in the opportunity cost salient condition, suggesting that people were less likely to consider opportunity cost (and purchased the video) when the opportunity cost information was not salient

Methods

Results

Conclusion