Got an email and a call from Andrea McKenna from CardLine/American Banker the other day regarding a study that was conducted by researchers from Cornell and the State University of New York. The study found that:
“Consumers buy healthier food with cash than they do with credit and debit cards, as impulsive spending made easier when using credit and debit cards instinctively influences consumers to buy unhealthy food. Two factors are contributing to the difference in the types of food consumers buy when using cash and cards.
First, there is a correlation between unhealthiness and impulsiveness of food items. Unhealthy food items also tend to elicit impulsive responses. Second, cash payments are psychologically more painful than card payments, and this pain of payment can curb the impulsive responses to buy unhealthy food items.
The ease, or painlessness, of using credit and debit cards to pay for purchases caused consumers to more likely have cookies, cakes and pies in their shopping carts.”
My take: As far as I know, the market research industry isn’t regulated, and researchers aren’t required to have certain qualifications or pass any exams in order to practice their profession. But, if more researchers publish garbage like the study cited above, the current administration is going to put market research on the list of industries in need of regulation.
The “fact” that the researchers may have found correlations between whatever it was that they were looking for (oops, I mean, looking at) hardly proves, let along suggests, any causation between the factors. By not considering the demographics of the study participants (e.g., age and income levels), and by not comparing similar demographic groups where the only difference is card ownership, the researchers’ causation claims are dubious.
In addition, the claim that cash payments are psychologically more painful is questionable. Given the state of the economy, and the challenge many people have in paying their bills, putting another purchase on the credit card could be argued to be pretty painful, whereas the cash in your pocket, which has already been pulled out of a savings or checking account, and therefore considered to be “spending money” could be argued to the least painful form of payment.
The point that should be most persuasive in convincing you that the study is off-base is this: If we took away everyones’ credit and debit cards, would spending on unhealthy foods be lower than it is today? Doubtful. Very doubtful.
Trying to read into someone’s intentions is not only difficult, it’s not a necessarily wise thing to do. But, I can’t help but feel like the study was just another attempt at trying demonizing the financial services industry. I mean, why even conduct the study in the first place? Was the original hypothesis that credit and debit cards prevent obesity? And that, lo and behold, the study disproved the hypothesis?
Hmm. Maybe I should do a study on “College Professors Cause Stupidity” and prove that investments in expensive private schools like Cornell are a complete waste of money.