With its announcement of a new smartphone this week, Amazon unveiled advanced camera technology that could arguably be called “point and shoot yourself in the foot.”
Amazon’s foray into smartphones includes image-recognition technology that lets consumers point the phone at a product to buy it from its online store. The phone’s Firefly button recognizes more than 70 million products, the company says. Mixing compulsive smartphone usage with the instant gratification of point-and-purchase could take impulse spending to a new level. Within minutes of the announcement, the twitterverse saw the potential: “Amazon launches a shopping machine,” one person tweeted, “calls it a smartphone.”
But shopping convenience may come at a high cost for some people. The more removed people are from purchasing with cash the more they tend to overspend, behavioral finance experts say. Research shows that when people pay with plastic they can spend 20 percent to 30 percent more than when they use cash, says Denise Hughes, a financial coach based in San Carlos, California. Casinos use chips, behavioral experts note, to also remove the regulating “pain of paying.”
The phone could remove “frictions and barriers” — like taking out a wallet — that get people to think about purchases in a less emotional way, says Dan Ariely, behavioral economics professor at Duke University’s Fuqua School of Business. “The ability to act very quickly on our emotions is going to simply get people to buy more impulsive things,” he says. And those things, he adds, aren’t going to be vitamins or long-term savings bonds. “They’d buy stuff that is more shiny and tempting at the moment, like the new Amazon phone.”
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