If it's hot while you're looking for a house to buy, beware. You may end up spending more than you should.
Abnormal weather makes shoppers more irrational, according to a new study by researchers Meghan Busse of Northwestern University, Devin Pope of the University of Chicago, Jaren Pope of Brigham Young University and Jorge Silva-Risso of the University of California at Riverside. The study's authors examined about 40 million new vehicle sales and more than 4 million home sales. (Hat tip: the Washington Post's Wonkblog.)
The study found that consumers are more likely to buy homes with swimming pools or central air conditioning when it's hot. As a result, shoppers spend $1,600 more on average on swimming pools in the summer than those buying in the winter.
Consumers also are more likely to buy convertibles when it is hot or the sky is clear. Conversely, they're more likely to buy four-wheel drive vehicles when it is cold or snowing.
Consumers often regret these spending decisions: Shoppers are more likely to try to return a car quickly if they bought it on a day with abnormal weather, the study found.
"Many of the most important decisions that we make in life involve predicting our future preferences," the authors wrote. "This paper provides evidence that projection bias may limit our ability to make these predictions accurately." In other words, you wrongly assume that when it's hot it will continue to be hot, and you'll need that convertible down the road.
Consumers are irrational spenders in other ways, too. They are more enticed by free products than by discounts, even if the discount provides a better value, according to a recent study.
But one of the best ways to save money is just to wait until fewer people want what you would like to buy. The price probably will be lower, and you may be more rational when making your spending decision.