Merry Miser: The Antidote to Impulse Spending

I don't get it. These clothes looked great in the store and I was so excited to buy them but now, they're just... meh. Sorcerers and Their Apprentices discusses the impulse spending epidemic and how one app may hold the cure.

If you spend a few hours chatting with Charlie DeTar, a doctoral student in Chris Schmandt's Speech + Mobility group at the Media Lab, you'll likely come away thinking — as I did — that health care isn't the only area where we might be able to encourage better, more constructive behavior by arming people with more information about the consequences of their everyday choices and providing them with the tools to help them make better ones. DeTar believes that impulsive spending is another social epidemic, like obesity, that often results from "irrational" short-term decisions that may be pleasurable in the moment but make us unhappy in the long run.

DeTar's 2009 master's thesis project, called Merry Miser, was certainly well timed, coming as it did in the midst of the global financial crisis. By now it's widely known that out-of-control consumer spending was one of the many factors contributing to the precipitous meltdown. But DeTar maintains that this storm was brewing for the past two decades, as advances in information and communication technologies have enabled the marketing and advertising industries — or what he calls the persuasive media — to become more and more effective in influencing consumers' behavior.

For example, the explosive growth of the mobile phone industry and advances in the mobile phone platform such as location-tracking software have given the purveyors of persuasive media new ways to influence people to buy more. Today, using sophisticated real-time datamining algorithms, the persuasive media can "respond in real time, personalize its message, and interact in much richer and deeper ways than older media like TV, radio, or print advertisements." He cites systems that send advertisements, promotions, and coupons that are personalized according to a person's unique habits, spending profiles, and current location, straight to his or her mobile phone. To that I would add new technologies like near field communication that make it faster and easier to make purchases on the spot using your smart phone, whenever the impulse hits.

Yet, DeTar believes that the very same advances that have made us sitting ducks for advertisers and turned our lives into nonstop shopping sprees can actually be used to help us curb our spending and take control of our finances. Just as is the case with health care, too much information is currently part of the problem, but with the right tools, it can instead become part of the solution.

That's exactly the point of Merry Miser, a location-based service for smart phones that, instead of giving companies more information about our spending behavior patterns and habits, puts that information back in our hands, then helps us use it to spend less, and save more. Merry Miser is effectively an intervention — a tool to help you be more aware of your habits and understand the long-term consequences of your decisions before you make them, like at the moment just before you take that first step into a shop, restaurant, casino, or anywhere it knows, based on your past behavior, you are likely to be tempted to spend money. A true antidote to impulse shopping, "the goal is to make you more aware of your desires and impulses at the moment and how you're going to view your purchases in the long term," DeTar explains.

Here's how it works. Let's say that you frequently shop at a local clothing store. Every time you walk near the store, your Merry Miser, which knows exactly where you are from the GPS in the smart phone, will buzz and send you a text message reminding you how much money you have spent in that shop in the past and the amount of your average purchase. It will also remind you that when you were asked a few days after the purchases how you felt about them, they had quickly lost their luster for you. In fact, Merry Miser will remind you that you gave the overall shopping experience at that store a lukewarm rating, and when asked how you felt about your purchase a full month later, you admitted it was still hanging somewhere in the back of your closet, with the tags still on. Then, in case you didn't get the picture, Merry Miser will inform you that your "happiness" rating for shopping at this store is LOW. If that isn't enough to make you resist that sweater in the window display, Merry Miser will show you a simple visual image depicting the current state of your finances relative to your goals. And finally, just to be sure you remember the value of being thrifty, it will show you a poignant and motivational quote, like this one from Bertrand Russell: "To be without some of the things you want is an indispensable part of happiness."

As you can see, Merry Miser is less about managing your money and more about managing your information about your impulses, desires, and habits, and the emotions behind them, to help you make more reasoned, rational spending decisions. "There is no moment when Merry Miser tells you ‘don't spend,' " DeTar explains. "The information it presents is relatively neutral in respect to whether or not you should make the purchase. The purpose is to make you more aware of exactly where your money is going and how this is contributing to your well-being. It helps you to make a better decision." Again, we see how technology can be used to right the imbalance between what other people — in this case, businesses — know about us and what we know about ourselves, and it can put the power back in our hands.

Merry Miser is currently in its prototype stage, being tested by a handful of subjects. DeTar acknowledges that in order for a service like Merry Miser to take off, banks will need to participate by making some changes in how they record their transactions, making certain information more public. Given how much money the banks make from consumers' overspending today, he is sure that this will take some time. But I believe that eventually, technologies like Merry Miser will convince banks and other consumer businesses that in the long run they will make more money by helping people spend their money wisely. Everyone will be better off, and perhaps we will avoid a recurrence of the irrational behavior that helped bring us all to the brink of disaster just a few years ago.

Excerpted from The Sorcerers and Their Apprentices by Frank Moss © 2011 Frank Moss. Reprinted by permission of Crown Business, an imprint of the Crown Publishing Group

Merry Miser: The Antidote to Impulse SpendingS

Frank Moss is managing partner of Strategic Software Ventures, LLC, and a part-time professor of the practice at the MIT Media Lab, where he heads the New Media Medicine group. He has spent his career developing innovative technologies and bringing them to market.

The Sorcerers and Their Apprentices: How the Digital Magicians of the MIT Media Lab Are Creating the Innovative Technologies That Will Transform Our Lives is available from Amazon.com