Behavioural Finance and Consumer Spending Patterns: Insights from Post-Pandemic Economies

Anneke De Vries

doi:10.35841/AAJFM-9.3.301

Mini Review - Journal of Finance and Marketing (2025) Volume 9, Issue 3

Behavioural Finance and Consumer Spending Patterns: Insights from Post-Pandemic Economies

Anneke De Vries^*

Department of Neurology, peking university, Wenling, China.

*Corresponding Author:: Anneke De Vries
Department of Neurology
peking university, Wenling, China.
E-mail: a.devries@molmed.nl

Received: 04-Jun-2025, Manuscript No. AAJFM-25-166778; Editor assigned: 06-Jun-2025, PreQC No. AAJFM-25-166778(PQ); Reviewed: 19-Jun-2025, QC No AAJFM-25-166778; Revised: 23-Jun-2025, Manuscript No. AAJFM-25-166778(R); Published: 30-Jun-2025, DOI:10.35841/AAJFM-9.3.301

Citation: De Vries A. Behavioural finance and consumer spending patterns: Insights from post-pandemic economies. J Fin Mark. 2025;9(3):301

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Introduction

Behavioural finance has emerged as a powerful lens through which to understand consumer spending patterns, particularly in the context of significant global disruptions such as the COVID-19 pandemic. Traditional economic theories often assume rational decision-making based on complete information and stable preferences. However, the pandemic highlighted that consumer behavior is frequently influenced by psychological, emotional, and social factors that defy purely rational models. Post-pandemic economies offer a unique opportunity to analyze how fear, uncertainty, and altered priorities have reshaped financial behaviors and spending decisions. The fusion of behavioral finance principles with real-world data from this period provides valuable insights for economists, policymakers, businesses, and marketers aiming to adapt to a transformed economic landscape [1].

One of the most striking behavioral finance phenomena observed during and after the pandemic is the shift in consumer risk perception. Faced with widespread health risks, job losses, and economic downturns, many consumers reevaluated their spending priorities and financial strategies. Initially, uncertainty prompted a significant increase in precautionary savings. Even in economies where governments provided stimulus payments or financial relief, many individuals chose to save rather than spend, driven by anxiety about future income and job stability. This behavior aligns with the behavioral finance concept of loss aversion—people tend to fear losses more than they value equivalent gains. In uncertain times, the desire to avoid potential future losses led to more conservative financial choices, even at the expense of short-term consumption [2].

As restrictions eased and economies began to reopen, a contrasting phenomenon emerged: revenge spending. This is characterized by a sudden spike in discretionary spending, particularly on travel, dining, and luxury goods, as consumers sought to compensate for prolonged periods of deprivation. Behavioral finance explains this behavior through concepts such as emotional accounting and the availability heuristic. Consumers emotionally “accounted” for the sacrifices made during lockdowns and justified splurges as a form of reward or escape. The vividness of the lockdown experience made the desire for indulgence more psychologically salient, influencing spending in ways not fully explained by income levels or financial constraints [3].

The pandemic also catalyzed long-term changes in spending categories and consumer values. Many individuals reoriented their spending toward health, wellness, and home improvement. Subscriptions to fitness apps, purchases of ergonomic furniture, and investments in home entertainment systems saw significant growth. This shift reflects the behavioral tendency toward mental anchoring, where past experiences anchor future expectations and preferences. Consumers who spent more time at home developed new routines and preferences that have persisted even after normalcy resumed. These behavioral anchors have led to a reallocation of spending, with less emphasis on formalwear, commuting, and office lunches, and more on home-centric goods and services [4].

Digital adoption accelerated dramatically during the pandemic, altering consumer spending channels as well. E-commerce, contactless payments, and app-based financial services became the norm. Behavioral inertia—once a barrier to digital adoption—was overridden by necessity, prompting consumers to try and then continue using new technologies. The endowment effect, which describes how individuals value something more once they possess or become accustomed to it, helped solidify these changes. Once consumers experienced the convenience of digital platforms, many chose not to return to traditional methods, even when they became available again. This shift not only affected retail and banking industries but also created new opportunities for fintech firms and digital marketers [5].

Social norms and herd behavior have also played a critical role in post-pandemic spending. During the lockdown, social media became a powerful channel through which people shared coping mechanisms, lifestyle upgrades, and personal milestones. This digital interconnectedness influenced consumer decisions through social proof—a behavioral finance concept where individuals mimic the actions of others in an attempt to make correct choices. For example, viral trends around home baking, indoor fitness equipment, or sustainable living created waves of demand that far outpaced traditional marketing efforts. In post-pandemic economies, this pattern continues, with consumer choices heavily influenced by what peers and influencers endorse, indicating a shift from individual preference to socially validated consumption [6].

Behavioral finance also offers insight into the polarization of spending patterns observed in post-pandemic economies. While some consumers increased spending due to accumulated savings and stable employment, others continued to struggle with financial instability. This divergence created a bifurcated economy where luxury brands thrived alongside discount retailers. The concept of mental accounting helps explain how individuals compartmentalize their finances into separate “budgets” based on source or purpose. For instance, stimulus checks were often viewed as “extra” money, leading to indulgent spending by some recipients, even as they economized elsewhere. Others allocated relief funds strictly toward essentials, reflecting different risk perceptions, financial literacy levels, and psychological responses to economic stress [7].

Inflation and supply chain disruptions in the aftermath of the pandemic further shaped consumer spending behavior. As prices rose unpredictably, many consumers engaged in anticipatory buying—purchasing goods in bulk or earlier than needed to avoid future price increases. This behavior reflects the behavioral bias of hyperbolic discounting, where individuals place disproportionate value on immediate rewards over future benefits. At the same time, price sensitivity increased, particularly among middle-income households. Consumers became more vigilant about promotions, discounts, and value-for-money propositions, favoring brands that emphasized transparency and affordability [8].

Government policy responses and central bank actions also interacted with behavioral finance dynamics in shaping consumer behavior. Interest rate changes, housing incentives, and financial education campaigns had varied psychological impacts. For instance, low interest rates encouraged home buying and refinancing, not just through traditional economic incentives but also through the social signaling associated with homeownership. Behavioral nudges, such as default enrollment in relief programs or reminders to claim benefits, proved effective in influencing participation rates. These insights underscore the importance of designing policy interventions that account for cognitive biases and emotional triggers [9].

In the realm of investment behavior, the post-pandemic period saw an influx of retail investors driven by a combination of boredom, increased savings, and social influence. Platforms like Reddit’s WallStreetBets, TikTok finance influencers, and commission-free trading apps facilitated a surge in speculative trading. Herd behavior, overconfidence bias, and the illusion of control led many individuals to take high-risk positions in volatile assets. Behavioral finance frameworks help explain why traditional warnings about risk were often ignored in favor of narratives, peer excitement, and perceived control. This speculative wave highlights the need for improved financial literacy and regulatory frameworks that can respond to the behavioral realities of modern investors [10].

Conclusion

In conclusion, behavioral finance offers a nuanced and dynamic understanding of consumer spending patterns in post-pandemic economies. The pandemic not only disrupted economic systems but also reshaped individual and collective psychology in ways that continue to influence financial decisions. Concepts such as loss aversion, mental accounting, herd behavior, and hyperbolic discounting have proven essential in explaining why consumers save, spend, invest, or refrain from economic activity. As the global economy continues to adapt, the integration of behavioral insights into policy, business strategy, and financial education will be essential. Understanding the emotional and cognitive dimensions of spending behavior enables more effective engagement with consumers, fosters more inclusive economic recovery, and supports the development of systems that are not only efficient but also human-centered and resilient.