Tourist satisfaction and travel expenditures: A reference-dependent behavioral economics perspective

Abstract

Motivated by limitations in priord research that assumes linear and symmetric satisfaction–spending relationships, this study applies a reference-dependent framework grounded in prospect theory to examine how tourist satisfaction measured relative to culturally and motivationally shaped reference points influences expenditure behavior in inbound tourism. Using a pseudo-panel of international tourists visiting South Korea and estimating a two-way fixed effects model, the results show that expenditure responds to deviations from reference points rather than to absolute satisfaction levels. Spending responses differ across gain and loss domains, with larger effects in the loss domain, and exhibit nonlinear dynamics. These findings suggest that reference-dependent evaluations systematically translate into observable tourist spending behavior, advancing behavioral perspectives in tourism expenditure research.