Frontiers: Shrinkflation Aversion: When and Why Product Size Decreases Are Seen as More Unfair than Equivalent Price Increases

Consumers worldwide have been struggling to keep up with rising costs of liv-ing. Although many firms have (directly) increased their prices, others have engaged in the practice of product downsizing—decreasing the size or quantity of the product without changing its price. In this research, I investigate consumers’ beliefs about the fairness of product downsizing compared with equivalent price increases (i.e., holding the price per unit of product constant). Five preregistered experiments demonstrate that, whereas the vast majority of people judge price increases in response to cost increases as fair, this pattern is attenuated—or even reversed—for product downsizing. Consequently, the proportion of consumers who view product downsizing as unfair is greater than the proportion who view an equivalent price increase as unfair. This phenomenon, referred to as “shrinkflation aversion,” is predominantly driven by consumers’ beliefs that product downsizing (versus price increases) is a deceptive practice. Importantly, I provide empirical evidence for two key moderators of the phenomenon: (1) the transparency of the product change and (2) the presence (versus absence) of increases in the firm’s costs.