Do upward social comparisons on social media cause financial
problems: the influence of social media on the feeling of
scarcity and financial decision-making
By
Ellen Snijders
University of Groningen
Faculty of Economics and Business
MSc Marketing Management
June 2020
Gersthullen 7
9403 WK Assen
(06)15191334
E.R.Snijders@student.rug.nl
Student number: 2927381
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Abstract
The impact of social media in people’s lives has become significant in recent years. With the growth of the use of social media, the number of social comparisons is also increasing. Through social media, people have more information about others, which makes these comparisons possible. On social media, people like to show their best side, which means that upward social comparisons in particular take place. Upward social comparisons generally have negative consequences. The upward social comparisons could create a sense of scarcity in people. Research has shown that this feeling of scarcity can lead to worse financial decisions. Therefore the study focuses on the effect of social comparisons on social media on financial decisions and whether this relationship is mediated by the feeling of scarcity. To investigate this, an online survey was conducted among people (N= 90) of different age groups. Unfortunately no evidence has been found in this study that upward social comparisons lead to a feeling of scarcity, this can be explained by the fact that the social media posts used in this study did not gave the desired effect. Statistical evidence has been found for the relationship between upward social comparisons and more short-sighted financial decisions for participants up to and including the age of 21. Due to the small sample, this effect still needs to be investigated further. Statistical evidence has also been found for the effect of the feeling of scarcity on more short-sighted financial decisions. Since the effect on the feeling of scarcity was not significant, future research will have to show whether this effect is explained by the feeling of scarcity or by relative deprivation.
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Table of contents
1. Introduction
2. Theoretical framework
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Do upward social comparisons on social media cause financial problems: the influence
of social media on the feeling of scarcity and financial decision-making
1. Introduction
Social media have grown rapidly in recent years and the impact of these media in people’s lives has become significant (Siddiqui & Singh, 2016; Galoni & Labroo, 2017; Akram & Kumar, 2017). Due to the increased use of social media, the way of communicating changes rapidly (Boateng & Amankwaa, 2016). Social networks are now one of the most widely used communication methods (Kaya & Bicen, 2016). “Social networking sites allow users to construct electronic profiles for themselves, provide details about their lives and experiences, post pictures, maintain relationships, plan social events, meet new people and make observations of others’ lives” (Vogel et al., 2014, p. 206; Boyd & Ellison, 2007; Ivcevic & Ambady, 2012; Nadkarni & Hofmann, 2012; Tosun, 2012). With this, social networking sites have a positive effect on making new social connections (Clark et al., 2017). Social networking sites make it easier to connect with others (Ellison & Boyd, 2013). Besides that social media have advantages, they also have a major disadvantage. The downside is that people compare themselves to the people they see on social media (Haferkamp & Krämer, 2011). According to the social comparison theory of Festinger (1954), people have a drive to gain accurate self-evaluations. To find accurate knowledge about themselves, people compare themselves with similar others (Festinger, 1954). With the rise of social media, people have more immediate access to information about others and this increases the ability to make social comparisons (Galoni & Labroo, 2017). Because people like to show themselves at their best on social media, upward social comparisons are mainly made (Manago et al., 2008; Chou & Edge, 2012; Jan et al., 2017). When it comes to upward social comparison, it means that people compare themselves to people who seem better (Vogel et al., 2014). These upward comparisons have several negative consequences, such as a lower evaluation and less self-confidence (Vogel et al., 2014).
4 A lot of research has already been conducted into the effects of upward social comparisons on social media (Haferkamp & Krämer, 2011; Chou & Edge, 2012; Vogel et al., 2014). The effect of the feeling of scarcity on financial decisions has also been investigated (Shah et al., 2012; Haushofer & Fehr, 2014; Cook & Sadeghein, 2018). The combination of these effects has never been investigated before. As the use of social media increases and with it the social comparisons (Siddiqui & Singh, 2016; Galoni & Labroo, 2017; Akram & Kumar, 2017), it is important that the influence of these social comparisons is investigated. In addition to the known negative effects that social media has, such as that the use leads to lower self-evaluation and self-confidence (Vogel et al., 2014), this research can provide insight into another negative effect, namely poor financial decisions. If upward comparisons on social media do indeed lead to worse financial decisions, could that have major consequences for society because of the poverty trap. The research question of this thesis is therefore:
“Do upward social comparisons on social media affect financial decision-making, and is this relationship mediated by feelings of scarcity?”
To answer this research question, online surveys are used. This thesis will consists four parts. First, a literature review that provides an overview of the relevant literature about the effect of upward social comparisons on social media on the feeling of scarcity and about the effect of the feeling of scarcity on financial decisions. Second, a methodology part follows with information about how the research is designed, which procedure the participants undergo and how the data is analysed. After that, the results section will list the results of the analyses. Then a conclusion is given and in the discussion the limitations of this research are mentioned and the possibilities for follow-up research. This thesis ends with a short final conclusion.
2. Theoretical framework
2.1 Feeling of scarcity
As mentioned before, is the feeling of scarcity a feeling that people have when they feel that they have less than what they need (Mullainathan & Shafir, 2013). This feeling of scarcity can occur in many areas (Shah et al., 2012). People can experience scarcity in money, when they feel they do not have enough money to pay for all the costs (Shah et al., 2012). People can also experience scarcity in time, if they feel they do not have enough time to meet the deadlines (Shah et al., 2012). Scarcity can also be experienced in the area of personal characteristics, such as intelligence, appearance, social network and popularity. Here too, people can feel that they have less than what they need in these areas.
5 People often tend to look for accurate knowledge about themselves. To find this knowledge, people compare themselves with similar others (Festinger, 1954). This is also known as the social comparison theory of Festinger (1954). The core feature of this theory is that people search for a similarity or a difference between the other and the self on a certain dimension (Suls & Wheeler, 2013). This comparison can be made in many areas, for example in the field of money, appearance or intelligence. With the rise of social media, people have more access to information about others (Liu et al., 2017) and therefore social media sites provide abundant opportunities for social comparisons (Vogel et al., 2014). Social media today mainly consist of popular social networking sites (SNSs) like Facebook and Instagram, which both have a lot of users around the world (Vogel et al., 2014). Facebook has more than 2,6 billion monthly active users (Statista, 2020) and Instagram has more than 800 million monthly active users (Statista, 2019). SNSs allows users to create a personal profile, where they can share details about their lives and make observations of someone else's life. By observing someone else’s life, people have more detailed information about others. Therefore SNSs are often used as a basis for social comparisons (Haferkamp & Krämer, 2011; Vogel et al., 2015). Research showed that about 88% of people make social comparisons on Facebook (Jan et al., 2017). On Facebook or on other SNSs people can see how attractive or well-dressed someone is, what possessions someone has or what he or she does in life. When people see this kind of information about others, they relate this information to themselves (Mussweiler et al., 2006). In fact, they constantly compare themselves with others. For example, if they see someone on a SNS who is well-dressed, they start thinking if they are just as well-dressed as that person. Comparing oneself with others has several functions, such as self-evaluation (Festinger, 1954), inspiration (Lockwood & Kunda, 1997) and self-enhancement (Gruder, 1971; Wills, 1981).
Social comparisons can be made in two ways: upward social comparisons and downward social comparisons. “Upward social comparison occurs when comparing oneself with superior others who have positive characteristics, whereas downward social comparison occurs when comparing oneself with inferior others who have negative characteristics” (Vogel et al., 2014, p. 206; Wills, 1981; Wood, 1989). Downward social comparisons mainly have a positive influence, it can lead to self-enhancement (Gruder, 1971; Wills, 1981). Because people compare themselves to less fortunate others, they enhance their own subjective well-being (Wills, 1981). Upward social comparisons often have a more negative influence on people than downward social comparisons (Vogel et al., 2014). In upward social comparisons, people compare themselves to people who seem to be better, which makes people feel themselves inadequate (Vogel et al., 2014).
6 social media look like superior others who only have positive characteristics, which leads in particular to upward social comparisons. The research of Jan et al. (2017) showed that 98% percent of all comparisons made on Facebook are upward social comparisons. As a result, people compare their realistic offline selves to the idealized online selves of others (Vogel et al., 2014), which is of course a skewed comparison. This has a negative influence on the self-perception of people (De Vries & Kühne, 2015).
2.3 Negative effects of upward social comparison
7 in-person comparisons when it comes to body image (Fardouly et al., 2017). Ultimately, upward social comparisons on social media can lead to depressive symptoms (Feinstein et al., 2013; Lup et al., 2015). The study of Lup et al. (2015) showed that upward social comparisons moderated the indirect relationship between the use of Instagram and depressive symptoms (Lup et al., 2015). Being exposed to upward social comparisons decreases self-confidence and lower self-confidence can lead to depressive symptoms (Liu et al., 2017).
The negative effect of upward social comparisons is stronger for adolescents. This is because, “Adolescence is a transitional phase characterized by significant psychosocial changes” (Valkenburg et al., 2017, p. 35). At this stage of life, a coherent sense of the self must be developed ( Valkenburg et al., 2017). To develop a coherent sense of the self, examples from the social environment are needed (Erikson, 1968). Nowadays social media are also used for examples (Stapleton et al., 2017). In addition to age, the extent to which social media is used also influences the negative effect of upward social comparisons (Vogel et al., 2014). Here again, it is the adolescent who spends the most time on social media, which makes the negative effect stronger (Coyne et al., 2013; Jan et al., 2017). More frequent use leads to a lower self-esteem (Vogel et al., 2014; Jan et al., 2017) and decreased well-being (Kross et al., 2013). More frequent use of social media also has more negative effects for people who follow more strangers, because people are more likely to believe that strangers have a better life and that life is not fair (Chou & Edge, 2012; Lup et al., 2015).
2.4 Feeling of scarcity and financial decisions
On the basis of the above literature, it could therefore be expected that upward social comparisons lead to a feeling of scarcity. The unrealistic upward social comparisons that take place on social media give people the feeling that in certain areas they have less than they need (Vogel et al., 2014). When people experience that feeling, concerns arise about that area. For example, if they think that they are less handsome than the people they compare themselves to on the basis of upward social comparisons on social media, concerns about the lack of beauty will arise. People will try to fill the deficiencies. This causes stress and negative affective states (Haushofer & Fehr, 2014). In this case stress and negative affect are defined as: “an organism’s reaction to environmental demands exceeding its regulatory capacity—and that this effect may change people’s behaviourally revealed preferences” (Haushofer & Fehr, 2014, p. 862). These stress and negative affective states consume cognitive capacity (Shah et al., 2012; Mani et al., 2013; Haushofer & Fehr, 2014), which means that others tasks or information can be neglected (Shah et al., 2012). That is what happens when people experience scarcity (Mani et al., 2013).
8 financial decisions (Mani et al., 2013). People who experience scarcity are busy filling the shortages. The stress and negative affective states that come with this, creates cognitive load (Shah et al., 2012; Mani et al., 2013; Haushofer & Fehr, 2014). This consumes mental capacity, leaving less capacity to make the right financial decisions, for example (Shah et al., 2012; Mani et al., 2013; Haushofer & Fehr, 2014). As a result, people who experience a feeling of scarcity focus more on the short term than on the future when it comes to financial decisions (Shah et al., 2012). It leads to an decrease of people's willingness to take risks and it ensures that people would rather have an income now than a higher income in the future (Haushofer & Fehr, 2014). The preference for income now over higher income in the future is also called time discounting. Time discounting means: “ any reason for caring less about a future consequence’’ (Frederick et al., 2002, p. 352). If the time discounting rate increases, it is an indication that someone gives more preference to immediate rewards (Yang, 2016). Several studies have found that people who experience a feeling of scarcity tend to discount future benefits more than people who do not experience a feeling of scarcity (Lawrance, 1991; Pender, 1996; Yesuf & Bluffstone, 2008; Yang, 2016). In the research of Carvalho et al. (2016), they measured the differences in time preferences of U.S. households shortly before payday and shortly after payday. Assuming people experienced more scarcity in money before payday than after payday. The research showed that before payday households are more present-biased when it comes to financial decisions (Carvalho et al., 2016). An explanation can be that due to the reduced cognitive capacity, it becomes more difficult to compare the costs and benefits of the different options (Shah et al., 2012). This makes it difficult to keep an overview.
9 2.5 Financial problems
The fact that people who experience scarcity mainly look at the term benefits, results in short-sighted financial decisions. These short-short-sighted financial decisions will further reduce the income in the long-term (Haushofer & Fehr, 2014). If they would also look at the long-term benefits, they would invest in education, for example. Good education gives a chance for a better job in the future, allowing people to earn more. That would result in long-term financial benefits (Barham et al., 1991). But because people who experience scarcity only look at the short-term, the financial situation continues to deteriorate due to short-sighted financial decisions. In this way it is even harder to improve the financial situation (Haushofer & Fehr, 2014). This is also called poverty trap. An poverty trap is an “self-reinforcing mechanism, which causes poverty to persist” (Sanchez Carrera, 2019, p. 613; Azariadis & Stachurski, 2005). The short-sighted financial decisions made by people experiencing scarcity only make the financial situation worse, the financial problems are getting bigger and this makes it increasingly difficult to escape poverty (Sanchez Carrera, 2019).
2.6 Social media, feeling of scarcity & financial decisions
The above literature has shown that many upward social comparisons take place via social media (Haferkamp & Krämer, 2011). These upward social comparisons have negative effects (Liu et al., 2017). Because people compare themselves with perfectly looking people, they value themselves worse (Vogel et al., 2014). This is expected to lead to people experiencing a feeling of scarcity. That feeling of scarcity causes people to make more short-sighted financial decisions, because the feeling of scarcity takes cognitive capacity (Mani et al., 2013; Haushofer & Fehr, 2014; Yang, 2016). The cognitive system of a person has only a limited capacity (Baddeley & Hitch, 1974; Neisser, 1976; Luck & Vogel, 1997). So there is less capacity left to make well-considered decisions (Mani et al., 2013; Haushofer & Fehr, 2014; Yang, 2016). This ensures that people mainly make financial decisions that give immediate benefits. These short-sighted and risk-averse financial decisions can cause financial problems (Haushofer & Fehr, 2014), which can ultimately lead to poverty. It could therefore be said that being exposed upward social comparisons on social media leads to more short-sighted financial decisions, because a feeling of scarcity is created. To investigate this, the following hypotheses have been formulated:
Hypothesis 1: Upward social comparisons on social media lead to more short-sighted financial decisions.
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Figure 1.1 Conceptual model
3.
Methodology
3.1 Participants
This study investigated the relationship between upward social comparisons on social media and financial decisions and whether this relationship was mediated by the feeling of scarcity. To investigate this, 90 online surveys were conducted. 35,6 percent of the people who completed the online survey were men, 63,3 percent were women and 1,1 percent preferred not to indicate gender. The average age of the participants was 28 years old (M= 27,8, SD= 13,041). The ages of the participants ranged from 15 to 64 years old. A large proportion of the participants were between 21 and 25 years old (45,6%). 25,6% of the participants were younger than 21 years old and 28,9% of the participants were older than 25 years old.
3.2 Research design
11 After they had seen the social media posts, participants had to read a described situation. The described situation outlined a dilemma that the participants faced. The dilemma was that the participants had 250 euros left after they paid that month's fixed expenses. Of these 250 euros they normally tried to put 200 euros aside for the car that they would like to buy in a while. But that evening they had a party, for which they wanted to buy new clothes. However, 50 euros was not enough to get new clothes. The participants therefore had to choose how much of the 250 euros they would spend on the clothes and how much they would put aside to save for the car. This dilemma measured whether the participants would opt for a financial decision that would yield immediate benefit, in this case the new clothes, or for a financial decision that would yield a benefit in the long term, in this case saving for the car. The idea was that participants who were confronted with upward social comparisons were more likely to choose the option that provided immediate benefit (Lawrence, 1991; Pender, 1996; Yesuf & Bluffstone, 2008; Yang, 2016). Participants who were not confronted with upward social comparisons were more likely to choose the option which yielded benefit at a later stage (Haushofer & Fehr, 2014).
To measure the feeling of scarcity that the participants experienced after seeing the social media, posts, the participants had to answer five questions. Questions that participants had to answer about the feeling of scarcity were for example: “When I see perfect social media pictures, I have the feeling that I have less than the people in the pictures” and “When I see perfect social media pictures, I have the feeling that I am less than the people in the pictures”. These questions were asked to measure whether the effect of upward social comparisons on social media on financial decisions is mediated by the feeling of scarcity. The idea is that people who were confronted with upward social comparisons on social media, experienced more scarcity (Vogel et al., 2014) and people who experienced more scarcity were more likely to choose for the option that provided immediate benefit than people who experienced less scarcity (Haushofer & Fehr, 2014).
The participants were only exposed to one of the two conditions, which means that the hypotheses of this research were tested in an 2 x 1 between-subject study design (Charness et al., 2012). The advantage of an between-subject study design is that it is statistically easy to implement, as long as the participants were randomly assigned (Charness et al., 2012).
3.3 Research procedure
12 If people wanted to participate, they could click on the link and the questionnaire was started. The procedure that the participants followed during this study started with two begin screens with some explanation about the study and some information about what was expected of them. For the participants with the condition with upward social comparisons, they saw three screens with on every screen a perfect social media post. The participants with the condition without upward social comparisons saw three screens with on every screen a neutral social media post. Before the participants saw these posts, they were asked if they wanted to look at them carefully. After the screens with the social media posts, a screen followed that outlined the situation in which the participant was currently in as described above. On the same screen participants could enter the amount of money they wanted to spend on their first car and/or the clothes for that evening’s party. After this, there was a screen where the participants had to answer five questions about the feeling of scarcity they experienced at that moment. The next screen contained demographic questions about age and gender. After the participants had completed this screen, they completed the survey and the data was saved. Finally, a screen with a ‘thank you’ followed.
3.4 Analysis plan
At the beginning of this thesis one research question has been formulated and based on the findings in the literature two hypotheses were formed. To answer these two hypotheses, three different analyses were used. To measure hypothesis 1, the direct relationship between upward social comparisons on social media and financial decisions, an independent samples t-test has been used. An independent samples t-test has been used, because the independent variable has a nominal scale and the dependent variable has a ratio scale. In addition, an independent samples t-test is a good way to determine if two groups are significantly different from each other. An independent samples t-test compares two groups based on their means in order to determine whether there is statistical evidence that the population means are significantly different. In this way it could be determined whether the financial decisions of participants who have seen the social media posts with upward social comparisons are significantly different from the financial decisions of participants who have seen the social media posts without upward social comparisons.
13 that all five questions together had the highest alpha= 0,823 (M= 10,94, SD= 3,899). An alpha of 0,823 is above 0,6, so sufficient reliability could be guaranteed. To measure the relation between upward social comparisons on social media and the feeling of scarcity, an independent samples t-test was again used, because the independent variable has a nominal scale and the dependent variable can be considered as an interval scale. For the measurement of the relationship between the feeling of scarcity and financial decisions, a linear regression has been used, because the independent variable can be considered as an interval scale and the dependent variable has a ratio scale. In addition, a linear regression is a good way to measure whether the variation in the independent variable is a statistically significant predictor of the variation in the dependent variable. In this way it can be determined whether the variation in financial decisions can be statistically explained by the variation in the feeling of scarcity.
The influence of the control variables gender and age have been tested by a linear regression. The control variables were, in addition to the independent variable, also included as independent variables to measure the effect they had on the relationship between the independent and dependent variable. Finally, a mediation analysis was used to test whether the relationship between upward social comparisons on social media and financial decisions is mediated by the feeling of scarcity. The mediation analysis is the best to use here, because this analysis can calculate the extent to which the influence of upward social comparisons on social media on financial decisions is via the feeling of scarcity.
4. Results
4.1 Data management
Before the analyses can be done, the data has been first examined. First, all respondents with incomplete answers have been removed. Subsequently, the time that participants spent on the questionnaire was examined. The time most participants needed was between 2 and 3 minutes. The shortest time a participant took to complete the survey was 55 seconds. Since it was a short survey, it is likely that the person completed the questionnaire correctly. There were three participants who took a long time to complete the survey, but because the number of respondents is limited and their answers did not differ from the rest, it was decided to keep these participants. Finally, nothing strange came up when looking at patterns in answers. The data was now ready to perform the analyses.
4.2 Analyses
14 measure the effect of upward social comparisons on social media. In the first condition, also called the neutral condition, the participants were shown neutral social media images. 44 participants had this condition. In the second condition, also called the perfect condition, the participants were shown perfect social media images with upward social comparisons. 46 participants had this condition. To measure the financial decisions, a question was asked in the survey to divide an amount of 250 euros. Because all answers had to be 250 euros in total, the analysis only takes into account the amount spent on the new clothes. The average amount spent on this was 71,25 euros for the neutral condition and 69,89 euros for the perfect condition. See also table 1.1 for the descriptives.
Descriptives Neutral condition Perfect condition
Participants 44 46
Average expenditure € 71,25 € 69,89
Table 1.1 descriptives financial decisions
These averages already showed that the expected effect has not emerged. To measure this relationship, an independent samples t-test was done. This independent samples t-test was not significant, t(88)= 0,126, p= 0,900. The average expenditure of someone who saw the neutral social media pictures (M=71, 25, SD= 48,682) did not differ from the average expenditure of participants who saw the perfect social media pictures (M= 69,89, SD= 53,598). To check whether the control variables did not affect this relationship, a linear regression analysis was performed in which gender and age were included as independent variables. For this analysis, the participant who indicated "I prefer not to say" has been removed. The influence of gender was not significant, B= -5,772, t= -0,519, p= 0,605. The gender of the participants did not affect their financial decisions. The influence of age was significant, B= -0,912, t= -2,226, p= 0,029. The age of the participants influenced their financial decisions. This relationship was negative, so it could be concluded that older people spent less money on clothes for that night’s party in this study than younger people. The relationship between upward social comparisons on social media and more short-sighted financial decisions was not significant, but as younger people spent more money on the “short-sighted” financial decision, the effect could have been significant for younger people only.
15 21 years. The independent samples t-test with only the participants under the age of 22 was significant, t(24)= -2,089, p= 0,047. The average expenditure of someone who saw the neutral social media pictures (M= 62,14, SD= 25,699) did differ from the average expenditure of participants who saw the perfect social media pictures (M= 101,67, SD= 65,308). See also table 1.2 for the descriptives. So, hypothesis 1 was only significant for the group of participants aged under 22.
Descriptives Neutral condition Perfect condition
Participants 14 12
Average expenditure € 62,14 € 101,67
Table 1.2 descriptives financial decisions participants under 22
The second hypothesis of this research was: “Upward social comparisons on social media lead to a greater feeling of scarcity, which leads to more short-sighted financial decisions”. For the neutral condition, the average feeling of scarcity was 2,218 on a 1-5 scale. For the perfect condition, the average feeling of scarcity was 2,161 on a 1-5 scale. See also table 1.3 for the descriptives.
Descriptives Neutral condition Perfect condition
Participants 44 46
Average feeling of scarcity 2,218 2,161
Table 1.3 descriptives feeling of scarcity
16 feeling of scarcity influenced the financial decisions, B= 3,100, t= 2,289, p= 0,024. This relationship was positive, so it could be concluded that people who experienced more scarcity spent more money on the clothes for that night’s party than people who experienced less scarcity. See also table 1.4 for the descriptives.
Descriptives Neutral condition Perfect condition
Participants 44 46
Average expenditure € 71,25 € 69,89
Table 1.4 descriptives financial decisions
There was no significant direct effect between upward social comparisons on social media and financial decisions. To find partial mediation there had to be a significant direct effect. This was not the case in this study, therefore nothing can be explained by the mediator. Nevertheless, a mediation analysis has been done to confirm this. The mediation analysis showed that upward social comparisons on social media were not a significant predictor of financial decisions, without mediator, B= -1,3587, t= -0,1257, p= 0,9002. Upward social comparisons on social media also did not significantly predict financial decisions, with mediator, B= -0,4711, t= -0,0446, p= 0,9645. Upward social comparisons were also not a significant predictor of feeling of scarcity, B= -0,2866, t= -3468, p= 0,7295. Feeling of scarcity was a significant predictor of financial decisions, B= 3,0973, t= 2,2730, p= 0,0255. The explained variance of the regression was not significant, R2 = 0,0562, F(2,87)= 2,5915, p= 0,0807. The mediation analysis confirmed that the relationship between upward social comparisons on social media and financial decisions is not mediated by feeling of scarcity. There was a significant direct effect between upward social comparisons on social media and financial decisions for participants under the age of 22, but this sample is so small that a mediation analysis does not provide reliable results.
5. Discussion
This chapter provides a discussion of the results of the analyses described above. It starts with a conclusion. Next, the implications of this study will be mentioned, followed by the limitations and the recommendations for future research. The main purpose of this research paper was to examine the following research question: “Do upward social comparisons on social media affect financial decision-making, and is this relationship mediated by feelings of scarcity?”
5.1 Conclusion
17 part of hypothesis 2 cannot be accepted. This result is not in line with the theory. According to the literature, being exposed to upward social comparisons on social media leads to a worse evaluation of yourself (Festinger, 1954; Vogel et al., 2014). People think that they have less than the people they compare themselves to (Haferkamp & Krämer, 2011; Vogel et al., 2014), so it could be expected that this can cause a feeling of scarcity. However, this is not the case in this study. This can probably be explained by the fact that the social media posts that have been used did not give the right effect. The social media posts were particularly relevant for young people and not for older people. Mainly because young women were visible on all posts. In addition, the participants have only briefly seen these social media posts and the effect of upward social comparisons on social media becomes stronger as use increases (Vogel et al., 2014; Jan et al., 2017).
18 significant for young people up to and including the age of 21 years, could be explained by a different effect, which is mentioned in the limitations.
Because there was no direct effect between upward social comparisons on social media and financial decisions, there was no mediation effect. This is confirmed by the mediation analysis, which was not significant. The effect of upward social comparisons on social media on financial decision-making was not mediated by feeling of scarcity. Therefore, hypothesis 2 cannot be accepted.
5.2 Implications
Although most relationships were insignificant, this study provides new insights. Especially the influence of upward social comparisons on financial decisions for young people up to and including the age 21 years old is interesting. This relationship still needs to be investigated better because of the small sample, but given that this effect is partly supported by the literature, it is likely that this effect actually exists. According to the literature, the effect of upward social comparisons is stronger for adolescents, because in that phase a coherent sense of the self is developed and to develop that coherent sense, examples of others on social media are used (Valkenburg et al., 2017). In addition, it is especially the young people who use social media a lot (Jan et al., 2017). This insight is relevant for various parties.
From a business perspective, the insight is relevant for companies and marketeers. It is relevant to them because, they can respond to this with their marketing campaigns. By using upward social comparisons in campaigns, young people are more likely to make direct purchases, which is of course beneficial for a company. Since the relationship between upward social comparisons on social media and feeling of scarcity is not significant, the effect cannot be explained by the feeling of scarcity. After research in literature, the influence of upward social comparisons on financial decisions could be explained by seeing upward social comparisons as inspiration. This inspiration can act as a trigger for making purchases (Aragoncillo & Orús, 2017). Companies or marketeers can apply this by showing settings on social media that inspire people. These settings could be for example: handsome people in beautiful outfits, stylish luxuriously furnished houses or beautiful holiday resorts. People are inspired by these settings, which leads to more direct purchases for companies (Aragoncillo & Orús, 2017). Future research will have to show whether the effect of upward social comparisons on social media also applies to older people. If so, this effect can be used for multiple age groups in marketing campaigns
19 products that are visible on the social media posts. This should ensure that young people become aware of the fact that they do not have to believe all the images shown on social media, and that they should therefore consciously think before buying these products.
5.3 Limitations and recommendations for future research
Although this research is done carefully, it has limitations. The first limitation is that the results are contradictory. If it was indeed the case that the social media posts used did not gave the desired effect during this study, it is contradictory that the effect of these social media posts on financial decisions was significant for participants up to and including the age of 21years old. That this effect was significant is probably explained by another cause. Research shows that the use of SNSs influences impulse buying, with the SNSs Facebook and Instagram having the most influence on impulse purchases (Aragoncillo & Orús, 2017). Seeing beautiful photos of others provides inspiration and that inspiration can be a trigger to make purchases (Aragoncillo & Orús, 2017). This could explain the effect of upward social comparisons on social media on financial decisions. In future research, these two effects need to be separated. This can be done by asking participants at the end of the survey if they were affected because they experienced a sense of scarcity or because they saw the social posts as inspiration.
The second limitation of this study is whether the social media posts used evoke scarcity or relative deprivation. A feeling of scarcity arises when people feel they have less than they need (Mullainathan & Shafir, 2013). Comparisons with others are not necessary for the creation of this feeling. In previous studies, the effect of scarcity was manipulated by, for example, giving people few opportunities to fulfil a particular task such as guessing a word (Shah et al., 2012). In that case, people experienced scarcity in the number of opportunities and thus the effect could be measured. This study has attempted to manipulate scarcity by exposing people to social media posts of people who seem to have more, hoping that this would create a feeling of scarcity. However, you could also say that these social media posts create relative deprivation. Relative deprivation always arises through comparisons with other people, which in fact also happens in this research. Relative deprivation can also lead to more short-sighted financial decisions (Zhang et al., 2015). If people who experience relative deprivation believe that they lack the economic resources they desire and are entitled to, they have a strong tendency to acquire these material assets (Zhang et al., 2015). Future research will have to show whether perfect social media posts lead to a feeling of scarcity and/ or relative deprivation. In future research, scarcity could be measured by specifically asking participants if they felt that they had less than they needed by seeing the social media posts. Relative deprivation can be measured by asking questions that include the comparison with other people.
20 research will have to be done in the future with more participants. A small sample does not properly represent the population and the influence of outliers is greater, which could also explain why most relationships were insignificant. The effect of upward social comparisons on social media was significant for participants up to and including the age of 21. However, this effect was measured with an even smaller sample, namely 26 participants. It was examined whether this significant relationship was based on outliers. Among the 26 participants, there were three outliers. One participant spent zero euros on the clothes and two participants spent 200 and 250 euros on clothes. If these outliers are removed from the population, there is still a clear difference between the average expenditure of the group with the neutral condition (€66,92) and the average expenditure of the group with the perfect condition (€77). To really say that the effect of upward social comparisons on social media on financial decisions is indeed significant for participants up to and including the age of 21, a much larger sample is required.
The fourth limitation of this study is that the sample is not fully representative. 42,2% of the participants was aged between 22 and 25 years old. This is because the snowball effect was used to distribute the survey. Especially because the effect of age on both financial decisions and a feeling of scarcity turned out to be significant, it is important to investigate the effect of upward social comparisons on social media with a more evenly distributed sample when it comes to age. The effect of social media has so far often been studied on young people. Using a more evenly distributed sample when it comes to age can lead to new insights with regard to older people.
21 The final limitation of this study is that the financial decisions are not measured neutral. Short-term financial decisions are measured by the amount someone spends on clothes for that night's party. Which has not been taken into account is that one person cares more about clothes than another. The amount that people spend on clothes on average also differs per person. This has not been taken into account either. The same applies to long-term financial decisions. The long-term financial decisions are measured by the amount someone saves for his/her first car. Here too, one person cares more about cars than another. In addition, the use of a first car is particularly applicable to young people, assuming that older people already own a car. In future research, the effect of these preferences should be removed. This can be done by measuring how much money someone spends on clothes on average, how much someone cares to look nice and how much someone cares about cars. Other financial decisions may of course also be used in future research, as long as the effect of the preferences is removed.
6. Conclusion
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