Cultural differences in opportunity cost consideration

Abstract

Two studies were conducted to investigate cultural differences in opportunity cost consideration between Chinese and Euro-Canadians. Opportunity cost is defined as the cost of a benefit that must be forgone in order to pursue a better alternative (Becker et al., 1974). In both studies, participants read about hypothetical purchase scenarios, and then decided whether they would buy a certain product. Opportunity cost consideration was measured in two ways: (1) participants' thoughts pertaining to other (nonfocal) products while making decisions; (2) participants' decisions not to buy a focal product (Study 1) or a more expensive product (Study 2). Across both indexes, we found that after controlling for individual difference variables and amount of pocket money, Chinese participants in China considered financial opportunity cost more than Euro-Canadians in Study 1. Similar results were observed in Study 2 when comparing Chinese in Canada with Euro-Canadians However, the cultural effect on opportunity cost consideration was confounded by family income in Study 2. Implications for resource management, limitations of the current research and directions for future research are discussed.

Opportunity cost in consumer behavior: Definitions, operationalizations, and ambiguities

“…The next individual difference relates to cultural differences, as Zhang et al (2017) argued. Most of the research on opportunity cost consideration has been conducted in North America (e.g., Frederick et al, 2009;Northcraft & Neale, 1986;Spiller, 2011;Vera-Munoz, 1998), while the possibility of any differences between different regions is neglected.…”

“…Similarly, Masuda and Nisbett (2001) found that, compared with Americans, Japanese people recall more information about contexts and relationships, and are more likely to recognize an object when it is presented in its original setting instead of a novel setting. Based on this information, Zhang et al (2017) argued that East Asians will consider opportunity costs more than Europeans and North Americans. Across two studies, they found that Chinese participants considered financial opportunity cost more than Europeans and Canadians did, despite controlling for other factors such as the amount of pocket money.…”

“…Consumers tend to rely on available information to decide, and they often forget about the opportunity cost of their decisions (Frederick et al, 2009). Zhang et al (2017) proposed that the cause of opportunity cost neglect is bias in judgment and decision-making. Legrenzi et al (1993) illustrated that people are more likely to focus on the information explicitly presented in decision-making tasks.…”

“…They argued that the current literature about opportunity cost consideration in consumer behavior has mainly focused on one direction (the cheaper/lower-quality option), but this is only a part of the story. As has been investigated in many of the pioneer works in this field (e.g., Frederick et al, 2009;Plantinga et al, 2018;Zhang et al, 2017), reminding consumers about opportunity cost leads to an increase in the share of "not buying and saving instead" or "buying the cheaper option" decision; there is always a tradeoff between money and quality/saving, while the tradeoff between money and time was never investigated (Chatterjee et al, 2016). They also illustrated that framing could change consumers' preference in the tradeoff between time and money, emphasizing that the importance of money leads consumers toward saving money (and sacrificing time)…”

Exploring the Meaning of Cost Based Mo Polihu Lo Limu Custom of Gorontalo People

“…Cost actualization is not only involved in company activities, but it is also related to the prevailed culture in a society (Zhang, 2013); (Tumirin dan A. Abdurahim, 2015), and (Rahmat, 2016), (Rahayu, S., 2016). Accounting, actually, created from local culture as form of culture where the accounting developed (Rahayu, S., 2015).…”