Tomorrow is Thanksgiving. Which means in 48 hours, your inbox is going to explode with “savings.”
Except here’s the thing: most of those “savings” aren’t savings at all.
Let me break down what’s actually happening to your brain during Black Friday.
Truth #1: You can’t save money by spending it.
That 40 percent off Instant Pot you weren’t planning to buy?
You didn’t “save” anything. You spent $90 impulsively.
Retailers know this. They frame everything as “savings” instead of what it actually is: spending slightly less per unit in order to generate a much higher volume of unit sales.
I’ve been writing about the psychology of holiday sales for over a decade. Retailers wouldn’t slash prices if it didn’t massively boost their sales volume.
They need those discounts to trigger more purchases — enough to offset the hit they’re taking on each item.
The entire business model depends on it, because higher volume also means higher operating overhead (extra staffing, more customer service inquiries, etc.)
Retailers accept both lower margins and higher costs because the volume surge more than makes up for it.
And it works.
Around 40% of retail sales occur in the fourth quarter of the year. (If every quarter was evenly represented, it would (duh) be only 25%, so the holiday shopping season is literally make-or-break for a lot of retailers.)
The crazy thing about Black Friday/Cyber Monday sales is that it technically violates the law of supply and demand.
When demand surges during holidays, basic economics says prices should go up, not down.
But retailers drop prices anyway.
Why?
Because dropped prices trigger demand. (It’s circular and self-perpetuating.)
Discounts trigger something primal in our brains. The thrill of the hunt. The rush of the deal.
Retailers are betting that 20% discount will make you buy way more stuff than you planned.
The entire economy hinges on that bet being correct.
Truth #2: The excitement wears off way before your credit card bill.
Remember that rush you got from your last impulse buy?
How long did it last? A day?
Maybe a week if you’re lucky?
Psychologists call this “hedonic adaptation.” Basically, our brains are wired to get used to stuff really fast.
Buy a new TV? Within two weeks, it’s just the TV.
Those designer jeans? By next Tuesday, they’re just pants.
It’s the same reason lottery winners aren’t any happier a year later. Our brains adapt to the good stuff lightning fast.
But hedonic adaptation doesn’t work on debt. That credit card balance? You don’t get used to that. It stings every single month.
Hedonic adaptation gets worse when combined with all the other psychological tricks retailers use.
I went deep on this with behavioral economist Jeff Kreisler — there’s deep psychology around holiday shopping. We discussed how sales manipulate us, why we can’t let go of stuff we own, all of it.
(I’m re-running that episode this Friday, Nov 28, if you want the full breakdown.)
Be aware of hedonic adaptation, hidden costs, and the Diderot Effect. Between all of those, your brain is basically working against you this Black Friday.
We are psychologically wired to spend more when we see deals.
But once you’re aware of spending psychology, then when you buy that Instant Pot, you’ll know exactly what you’re doing. And why.
And that’s what “smart shopping” really is.
