BEHAVIORAL ECONOMICS & SOCIAL MEDIA: TO WHAT EXTENT DOES CONTENT CONSUMPTION ON INSTAGRAM REELS AFFECT CONSUMER BEHAVIOR AND SPENDING PATTERNS FOR GEN-ZS?

Abstract

This research explores the impact of Instagram Reels on consumer behavior and spending patterns, particularly within the Gen-Z demographic. The study hypothesizes that Gen-Z, being more active on Instagram, would spend more on products advertised through the platform compared to older generations. A survey was conducted, targeting two groups: those who primarily use Instagram and allocate more of their budget to purchases rather than savings, and those who do not. Contrary to the initial hypothesis, the survey results indicated that older demographics, such as Millennials and beyond, were more likely to purchase items advertised on Instagram, particularly clothes, accessories, and shoes. The study utilizes theories from behavioral economics, including Maslow’s Hierarchy of Needs, Nudge Theory, and the theory of Bounded Rationality, to explain consumer choices. However, these theories fall short in accounting for the diverse and unique behaviors of individual consumers. The findings suggest that while Gen-Z engages heavily with Instagram content, it is the older users who are more susceptible to the platform's advertisements. The study highlights the complexity of consumer behavior and the limitations of existing economic theories in predicting spending patterns influenced by social media.