How Credit Cards Affect Our Brains
Kanebridge News
    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,516,817 (-0.06%)       Melbourne $971,359 (-1.00%)       Brisbane $819,969 (+2.77%)       Adelaide $731,547 (+1.72%)       Perth $621,459 (+0.34%)       Hobart $751,359 (-0.46%)       Darwin $633,554 (-4.02%)       Canberra $1,005,229 (+2.77%)       National $966,406 (+0.40%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $700,089 (-0.30%)       Melbourne $470,277 (-0.26%)       Brisbane $404,718 (+2.58%)       Adelaide $332,602 (+1.44%)       Perth $348,181 (-0.09%)       Hobart $551,005 (+2.68%)       Darwin $355,689 (-3.55%)       Canberra $477,440 (+4.12%)       National $484,891 (+0.89%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 8,451 (-507)       Melbourne 12,654 (-279)       Brisbane 9,158 (+847)       Adelaide 2,765 (-40)       Perth 9,974 (+39)       Hobart 595 (+36)       Darwin 247 (-1)       Canberra 666 (-49)       National 44,510 (+46)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 8,895 (+164)       Melbourne 8,149 (-24)       Brisbane 2,260 (+33)       Adelaide 649 (+5)       Perth 2,489 (-21)       Hobart 101 (-3)           Canberra 430 (+13)       National 23,351 (+167)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $630 $0       Melbourne $470 $0       Brisbane $460 ($0)       Adelaide $495 (+$5)       Perth $500 ($0)       Hobart $550 $0       Darwin $600 ($0)       Canberra $700 ($0)       National $562 (+$)                UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $540 (+$10)       Melbourne $410 (+$2)       Brisbane $460 (+$10)       Adelaide $380 $0       Perth $440 (-$10)       Hobart $450 $0       Darwin $500 ($0)       Canberra $550 $0       National $473 (+$2)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 5,470 (-50)       Melbourne 7,404 (-70)       Brisbane 1,986 (-122)       Adelaide 875 (-29)       Perth 1,838 (-38)       Hobart 254 (+18)       Darwin 70 (-3)       Canberra 388 (+17)       National 18,285 (-277)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 10,652 (+58)       Melbourne 9,001 (-180)       Brisbane 1,567Brisbane 1,679 (-62)       Adelaide 403 (+4)       Perth 1,050 (-21)       Hobart 87 (+1)       Darwin 131 (-10)       Canberra 453 (+43)       National 23,344 (-167)                HOUSE ANNUAL GROSS YIELDS AND TREND       Sydney 2.16% (↑)      Melbourne 2.52% (↑)        Brisbane 2.92% (↓)       Adelaide 3.52% (↓)       Perth 4.18% (↓)     Hobart 3.81% (↑)      Darwin 4.92% (↑)        Canberra 3.62% (↓)       National 3.03% (↓)            UNIT ANNUAL GROSS YIELDS AND TREND       Sydney 4.01% (↑)      Melbourne 4.53% (↑)        Brisbane 5.91% (↓)       Adelaide 5.94% (↓)       Perth 6.57% (↓)       Hobart 4.25% (↓)     Darwin 7.31% (↑)        Canberra 5.99% (↓)       National 5.07% (↓)            HOUSE RENTAL VACANCY RATES AND TREND         Sydney 1.5% (↓)       Melbourne 1.9% (↓)       Brisbane 0.6% (↓)       Adelaide 0.5% (↓)       Perth 1.0% (↓)     Hobart 0.8% (↑)        Darwin 0.9% (↓)       Canberra 0.6% (↓)     National 1.2%        National 1.2% (↓)            UNIT RENTAL VACANCY RATES AND TREND         Sydney 2.3%ey 2.4% (↓)       Melbourne 3.0% (↓)       Brisbane 1.3% (↓)       Adelaide 0.7% (↓)     Perth 1.3% (↑)        Hobart 1.2% (↓)     Darwin 1.1% (↑)        Canberra 1.6% (↓)     National 2.1%       National 2.1% (↓)            AVERAGE DAYS TO SELL HOUSES AND TREND         Sydney 31.2 (↓)       Melbourne 30.9 (↓)       Brisbane 35.7 (↓)       Adelaide 27.6 (↓)       Perth 40.5 (↓)       Hobart 30.2 (↓)       Darwin 27.1 (↓)     Canberra 28.1 (↑)        National 31.4 (↓)            AVERAGE DAYS TO SELL UNITS AND TREND         Sydney 33.7 (↓)       Melbourne 32.6 (↓)       Brisbane 34.8 (↓)       Adelaide 29.5 (↓)       Perth 46.6 (↓)       Hobart 27.4 (↓)       Darwin 38.2 (↓)       Canberra 30.2 (↓)       National 34.1 (↓)           
Share Button

How Credit Cards Affect Our Brains

Buying with plastic doesn’t just eliminate a barrier to buying. It actively encourages purchases.

By Cheryl Winokur Munk
Tue, May 4, 2021Grey Clock 2 min

It’s been known for decades that credit cards encourage spending. But why that happens still isn’t entirely clear. New research offers some fresh insight into the causes—and how consumers might be manipulated in an increasingly cashless society.

Research on credit-card spending has tended toward the explanation that delaying payment removes a barrier to purchases in shoppers’ minds. A study published in February in Scientific Reports found evidence of another kind of trigger. Differences it found in brain activity between shoppers planning to use a credit card and those planning to buy with cash indicate that buying on credit doesn’t just ease shoppers’ inhibitions, it actively encourages purchases, the researchers say.

The upshot: When people are shopping with credit cards and see a product they like, the neural network in the brain that produces a sensation of reward perks up, which seems to create a craving to spend, says Sachin Banker, assistant professor at the University of Utah, who worked on the study as a Ph.D. student at the MIT Sloan School of Management.

“You’re basically feeling more reward when you shop with credit cards,” he says. “We don’t see that with cash. It was actually a very stark difference.”

Researchers used a form of magnetic resonance imaging to measure the brain activity of the study subjects as they participated in a shopping exercise. Each participant was shown a total of 84 everyday products over the course of three sessions and was asked whether they would buy each product at the stated price. Half the products were offered for purchase by credit card and half for purchase with cash. None of the products cost more than $50.

The differences in the shoppers’ brain activity support the hypothesis that after repeated credit-card purchases over time the brain learns to anticipate the rewards of credit-card shopping, according to the report. And that suggests that consumers could be conditioned to spend through the use of various sensory rewards in new payment systems, Dr. Banker says. For instance, with digital payments the use of particular sounds or vibrations on your smartphone when you make certain purchases but not others could, over time, teach your brain to anticipate rewards for buying specific products while you’re shopping.

Dr. Banker adds that further research could be done to see if the study’s theories hold true at higher prices. It also could study consumers who tend to overuse or misuse credit cards, to understand further why they act as they do. This study focused on people who mostly paid on time and used credit cards appropriately. Understanding brain patterns for other types of consumers could help lead to solutions that attempt to pre-empt harmful spending behaviour, Dr. Banker says.

Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: May 1, 2021

MOST POPULAR

Interior designer Thomas Hamel on where it goes wrong in so many homes.

Following the devastation of recent flooding, experts are urging government intervention to drive the cessation of building in areas at risk.

Related Stories

Private club memberships and luxury cars are some of freebies on the table.

By SHIVANI VORA
Mon, Aug 15, 2022 6 min

When Ryan Wolitzer was looking to buy an apartment in Miami Beach late last year, several beachfront properties caught his eye. All were two-bedroom homes in high-end buildings with amenities aplenty and featured glass walls, high ceilings and an abundance of natural light. But only The Continuum, in the city’s South of Fifth district, came with a gift: a membership to Residence Yacht Club, a private club that offers excursions on luxury yachts ranging from a day in south Florida to a month around the Caribbean. Residents receive heavily discounted charters on upscale boats that have premier finishes and are stocked with top shelf spirits and wine. Mr. Wolitzer, 25, who works for a sports agency, was sold.

“The access to high-end yachts swayed my decision to buy at The Continuum and is an incentive that I take full advantage of,” Mr. Wolitzer said. “It’s huge, especially in my business when I am dealing with high-profile sports players, to be able to give them access to these incredible boats where they experience great service. I know that they’ll be well taken care of.”

Freebies and perks for homeowners such as a private club membership are a mainstay in the world of luxury real estate and intended to entice prospective buyers to sign on the dotted line.

According to Jonathan Miller, the president and chief executive of the real estate appraisal and consulting firm Miller Samuel, they’re primarily a domestic phenomenon.

In the U.S. residential real estate market, gifts are offered by both developers who want to move apartments in their swanky buildings and individuals selling their homes. They range from modest to over-the-top, Mr. Miller said, and are more prevalent when the market is soft.

“When sales lag, freebies increase in a bid to incentivize buyers,” he said. “These days, sales are slowing, and inventory is rising after two years of being the opposite, which suggests that we may see more of them going forward.”

Many of these extras are especially present in South Florida, Mr. Miller said, where the market is normalizing after the unprecedented boom it saw during the pandemic. “The frenzy in South Florida was intense compared with the rest of the country because it became a place where people wanted to live full time,” he said. “Now that the numbers are inching toward pre-pandemic levels, freebies could push wavering buyers over the finish line.”

Kelly Killoren Bensimon, a real estate salesperson for Douglas Elliman in Miami and New York, said that the gifts that she has encountered in her business include everything from yacht access and use of a summer house to magnums of pricey wine. “One person I know of who was selling a US$5 million house in the Hamptons even threw in a free Mercedes 280SL,” she said. “They didn’t want to lower the price but were happy to sweeten the deal.”

A car, an Aston Martin to be exact, is also a lure at Aston Martin Residences in Miami’s Biscayne Bay. Buyers who bought  one of the building’s 01 line apartments—a collection of 47 ocean-facing residences ranging in size from 325 to 362sqm and US$8.3 million to US$9 million in price—had their choice of the DBX Miami Riverwalk Special Edition or the DB11 Miami Riverwalk Special Edition. The DBX is Aston Martin’s first SUV and retails for around US$200,000. It may have helped propel sales given that all the apartments are sold out.

=
An Aston Martin came with the sale for some buyers at Aston Martin Residences in Miami’s Biscayne Bay. Aston Martin Residences

The US$59 million triplex penthouse, meanwhile, is still up for grabs, and the buyer will receive a US$3.2 million Aston Martin Vulcan track-only sports car, one of only 24 ever made.

“We want to give homeowners the chance to live the full Aston Martin lifestyle, and owning a beautiful Aston Martin is definitely a highlight of that,” said Alejandro Aljanti, the chief marketing officer for G&G Business Developments, the building’s developer.  “We wanted to include the cars as part of the package for our more exclusive units.”

The US$800,000 furniture budget for buyers of the North Tower condominiums at The Estates at Acqualina in Sunny Isles, Florida, is another recent head-turning perk. The 94 residences sold out last year, according to president of sales Michael Goldstein, and had a starting price of US$6.3 million. “You can pick the furniture ahead of time, and when buyers move in later this year, all they’ll need is a toothbrush,” he said.

Then there’s the US$2 million art collection that was included in the sale of the penthouse residence at the Four Seasons Residences in Miami’s Brickell neighbourhood. The property recently sold for $15.9 million and spans 817sqm feet. Designed by the renowned firm ODP Architects, it features contemporary paintings and sculpture pieces from notable names such as the American conceptual artist Bill Beckley and the sculptor Tom Brewitz.

But it’s hard to top the millions of dollars of extras that were attached to the asking price in 2019 of the US$85 million 1393sqm  duplex at the Atelier, in Manhattan’s Hell’s Kitchen neighbourhood. The list included two Rolls-Royce Phantoms, a Lamborghini Aventador, a US$1 million yacht with five years of docking fees, a summer stay at a Hamptons mansion, weekly dinners for two at lavish French restaurant Daniel and a live-in butler and private chef for a year. And the most outrageous of all: a flight for two to space.

It turned out that the so-called duplex was actually a collection of several apartments and a listing that went unsold. It did, however, generate plenty of buzz among the press and in real estate circles and was a marketing success, according to Mr. Miller.

“A listing like this that almost seems unbelievable with all the gifts will get plenty of eyeballs but is unlikely to push sales,” he said. “Empirically, it’s not an effective tactic.”

On the other hand, Mr. Miller said that more reasonable but still generous freebies, such as the membership to a yacht club, have the potential to push undecided buyers to go for the sale. “A nice but not too lavish gift won’t be the singular thing toward their decision but can be a big factor,” he said. “It’s a feel-good incentive that buyers think they’re getting without an extra cost.”

Examples of these bonuses include a membership to the 1 Hotel South Beach private beach club that buyers receive with the purchase of a residence at Baccarat Residences Brickell, or the one-year membership to the Grand Bay Beach Club in Key Biscayne for those who spring for a home at Casa Bella Residences by B&B Italia, located in downtown Miami and a residential project from the namesake renowned Italian furniture brand. The price of a membership at the Grand Bay Beach Club is usually a US$19,500 initiation fee and US$415 in monthly dues.


The Grand Salon at at Baccarat Residences Brickell in Miami.
Baccarat Residences

Still enticing but less expensive perks include the two-hour cruise around New York on a wooden Hemmingway boat, valued at US$1,900, for buyers at Quay Tower, at Brooklyn Bridge Park in New York City. The building’s developer, Robert Levine, said that he started offering the boat trip in July to help sell the remaining units. “We’re close to 70% sold, but, of course, I want everything to go,” he said.

There’s also the US$1,635 Avalon throw blanket from Hermes for those who close on a unit at Ten30 South Beach, a 33-unit boutique condominium; in Manhattan’s Financial District, a custom piece of art from the acclaimed artist James Perkins is gifted to buyers at Jolie, a 42-story building on Greenwich Street. Perkins said the value of the piece depends on the home purchase price, but the minimum is US$4,000. “The higher end homes get a more sizable work,” he said.

When gifts are part of a total real estate package, the sale can become emotional and personal, according to Chad Carroll, a real estate agent with Compass in South Florida and the founder of The Carroll Group. “If the freebie appeals to the buyer, the transaction takes on a different dynamic,” he said. “A gift becomes the kicker that they love the idea of having.”

Speaking from his own experience, Mr. Carroll said that sellers can also have an emotional connection to the exchange. “I was selling my house in Golden Isles last year for US$5.4 million and included my jet ski and paddle boards,” he said. “The buyers were a family with young kids and absolutely loved the water toys.” Mr. Carroll could have held out for a higher bidder, he said, but decided to accept their offer. “I liked them and wanted them to create the same happy memories in the home that I did,” he said.

The family moved in a few months later.