Consumer behaviour: How emotions drive financial decisions

19th August 2022


You’ve probably heard that emotions and “gut feelings” are involved in consumer behaviour and decision making. But do you know how, why and where that “gut feeling” actually comes from? Put simply, physiological changes based on emotional signals result in ‘approach or avoidant decision making’. Let me explain. 


The first thing to note is that consumers are far from rational when it comes to decision-making, even in areas like finance. In fact, our emotional needs and cognitive biases influence over 80% of our decisions. Classical economic decision making theories assumed that humans were rational beings deciding based on statistics rather than emotions. A view some still hold to this day. 


However, research tells us that emotions play a more significant role in economic decision-making and are far more influential than our rational processes. Instead of viewing the economic decisions of consumers through an economic lens, brands should adopt more of a Neuroeconomics approach. Neuroeconomics is an interdisciplinary field made up of knowledge from economic decision making, psychology and neuroscience. 

Neuroeconomics helps brands understand the influence of social and cognitive factors on economic decision making and provides greater insight into the decision-making process. For companies, knowing how their customers really make decisions is crucial if they are to know what works around brand and product communication. It’s not just about price – but how we ‘feel overall about something’.  


So what is consumer behaviour based on? 

“Gut feeling”. 

Damasio’s somatic marker hypothesis helps explain the mechanisms behind decision making. It states that emotional processes use physiological responses to influence either approach or avoid a behaviour. Essentially, it’s your body’s way of creating the “gut feeling” that ultimately guides your decisions. In terms of survival and the ability to react quickly to situations we need a system that enables us to act fast. If you are suddenly faced with a sabre-toothed tiger on your way home from work, you could

  1. Slowly go through all the facts around the tiger’s likely behaviour, or
  2. Act fast and survive!

Simply put, a deep non-conscious decision making system that powers fast actions underpins our gut feelings.

Why should you care?


By understanding that consumer behaviour is based on gut feelings, you set yourself apart from other companies. Many still assume that humans make mostly rational decisions when engaging with their products. For example we could all shout about pricing and quality – and hope that our voice is loudest and most persuasive. Instead, try to pull on your customers emotional levers which can help you stand out. Companies can differentiate themselves from their competition with this approach and when they appeal to emotion, they have a better chance of success.


Only after exploring the “why” behind the gut feelings that drive decision making will you be able to really influence consumer decision making in a meaningful way. This will drive onboarding, engagement, trust or retention activity.


If you want help on how you can better engage your customers or employees from a psychological and behavioural science perspective, get in touch with an IB Business Psychologist at [email protected] or visit to get more information.

Author: Innovationbubble