On the Pain of Paying for a Vacation
Ever have a great vacation experience only to have that blissed out feeling robbed by a big bill at the end? It turns out how and when we pay matters. But there are ways around it to help you sustain those sunshiney feelings. Today on Sassonomics: exploring the pain of paying for vacations.
I love to travel. And after being stuck in the same 4 walls for two years during covid (with too many canceled trips to even mention! I literally have so much credit with the airlines right now), I’m ready to hit the skies.
I found myself FINALLY halfway around the world in Thailand and was really excited to try all the experiences. Hiking, eating, swimming, snorkeling, and… going to the spa. While the spa is not in my normal routine, there is literally a type of massage called Thai massage and I was in Thailand! One is compelled to relax and be pampered, right?
So a lovely time was had at the spa, and I was totally blissed out until the very last thing that happened was the payment. A cost that was not inside my usual budget, plus it was complicated with which credit cards worked and how to tip the lovely staff (which we did in cash, evidently). Leaving the spa I was still happy, but kind of… off put. A little bit of guilt for spending money, a little bit mind-racey at what that meant for my spending for the rest of the trip… definitely thinking about money rather than how relaxed I was.
What Happened? The Pain of Paying
I’ll tell you what happened: the pain of paying.
The pain of paying refers to the negative feelings we get when buying things, associated with the sensation of giving up (or losing) some of our money. We don’t like the sensation of losing something to a greater extent than we like the sensation of gaining things. This imbalance in our feelings about loss and gain is known as loss aversion.
What is interesting about the pain of paying is that it was the first time the idea was introduced that we had feelings about paying. In the Economics tradition, assumptions run closer to seeing payment as a rational trade off around utility (i.e., I value this tour of Bangkok so I will pay for it) and only the dollar amount really counted.
Parting with our hard-earned cash feels bad. How bad it feels depends on just how salient the loss feels to us. For example, how we pay matters. Research has found that paying with cash feels more painful than with credit card - the actual sensation of parting with physical cash seems to hit us harder.
When we pay seems to matter as well. When considering paying for something before or after consumption (and sometimes during - as in the case of a service or multiple ‘mini’ consumptions in a row) paying for things ahead of time takes away the pain of paying associated with consuming that thing. If you’ve paid in advance, by the time you get to consuming the product or service, it kind of feels… more free.
So when leaving the spa after my delightful Thai massage, I was confronted by the cost as the very last moment of the experience. I was also confronted by confusion around tipping conventions (adding a tip for any wellness service is normal in my life), but was not presented as an option via credit card payment so I had the experience of trying to figure out both credit card AND paying the tip with money, where my ‘travel cash’ was in limited supply.
Basically, my knots started to come back right away.
Dan Ariely and Jeff Kreisler explore this idea in a story about Kreisler’s honeymoon in the book Dollars and Sense. They have a couple great ideas on how to reduce the pain of paying on vacations.
To reduce the pain of paying, pay for things in advance (if possible). If the payment must come at the end, ‘set aside’ the money in advance. A tactic around this could be to stick that money in an envelope and label it.
Paying with credit cards or other non-cash options can help reduce the pain of paying, too. One thing I might suggest is to figure out how you are going to pay in advance (i.e., in this case we could have researched which credit card will work seamlessly rather than asking “oh will this credit card work? Oh no… will this one?).
We think of money differently if we mentally assign it to different things - in this case, this money was from the ‘vacation fund’, a completely made up fund in my mind where I spend more freely on special experiences than I would spending from my ‘everyday fund’. An idea to make that spending feel a bit more free is to do things that reinforce the money is coming from this special vacation fund so that you feel less badly about parting with it: take pictures outside the place where the experience is happening (note: this is definitely vacation behaviour. I rarely take pictures of myself outside the grocery store or the doctors office), wear your special vacation wear (note: I also rarely wear a jaunty sundress on my errand-runs in Toronto where it’s winter half the year).
Final note: The other thing that might be going on has to do with something known as the Peak-End Rule. This is a heuristic (or cognitive shortcut) that impacts how people remember events: we tend to recall the emotional peak of the experience and the end of the experience more strongly.
My spa experience was pretty consistent from an emotional point of view: zen tranquility leading to pleasant feelings of calm from start to almost finish… and then a crash on the emotional thermometer at the time of payment because of cost and payment confusion.
In Conclusion…
Next time I splurge on a special vacation experience, I will so all these things to help my brain see the moment as a special vacation thing rather than a money-spending experience. But like with everything, remember to stay mindful and spend within your limits! It’s always better to choose in advance to not be tempted in the moment (or else you might find yourself not being able to afford the basics later). Good budgeting, even on vacation, never goes out of style.
Bon voyage!
