Mental Budgeting and Consumer Decisions

Heath, Chip; Soll, Jack B.

doi:10.1086/209465

Cited by 618 publications

(561 citation statements)

References 17 publications

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“…Thaler (1993) states that mental accounting helps make better predictions about the consumer behavior, which differ from those in conventional economics or psychology (Webley, 1995). Heath and Soll (1996) propose a mental budget model that focuses on the question of how resources are grouped and named. In this model, consumers set budgets for various expenses, such as home shopping, clothes or food.…”

Section: Mental Budgetmentioning

confidence: 99%

“…The expenses are in turn allocated to these corresponding accounts, and deducted from the balance. For Heath and Soll (1996), this type of budget and expenditure allocation has a great impact on purchasing decisions in each category. Previous studies recognize that mental budget influences the purchasing decisions of consumers, and increases individuals' awareness about their financial situation, since it makes this information more salient in their minds, thus contributing to greater control over expenses and therefore less chance of indebtedness.…”

Section: Mental Budgetmentioning

confidence: 99%

“…In this study, we considered the household finance management construct as being comprised of the following two components: financial control (Antonides, Groot, & Raaij, 2011), mental budgeting (Heath & Soll, 1996;Thaler & Sustein, 2009;Antonides, Groot, & Raaij, 2011). Financial control refers to how consumers manage their revenues and expenses.…”

Section: Introductionmentioning

confidence: 99%

“…Financial control refers to how consumers manage their revenues and expenses. Mental budget helps consumers with household budget planning and control, and refers to how people mentally divide and group resources and expenditures in various categories (Heath & Soll, 1996;Thaler & Sustein, 2009). Although these are closely related activities, previous studies have not explicitly related household finances management with the practice of creating a mental budget.…”

Section: Introductionmentioning

confidence: 99%

“…Based on literature review, three personal characteristics became more evident when analyzing the influence on the household financial management behavior: self-control (Tangney, Baumeister, & Boone, 2004;Baumeister, 2002), preference for the use of credit (Prelec & Lowenstein, 1998;Ponchio, 2006), propensity to plan (Lynch, Netemeyer, Spiller & Zammit, 2010). The constructs of financial control (Antonides, Groot, & Raaij, 2011) and mental budgeting (Heath & Soll, 1996;Thaler & Sustein, 2009;Antonides, Groot, & Raaij, 2011) are the consumer responses which comprise the household finance management behavior.…”

Section: Introductionmentioning

confidence: 99%

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Antecedents and Consequences of Household Financial Management in Brazilian Lower-Middle-Class

Miotto

Parente

2015

Rev. adm. empres.

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Antecedentes e consequências do gerenciamento das finanças domésticas na classe média baixa brasileiraAntecedencias y consecuencias de la administración financiera doméstica en la clase media baja brasileña ABSTRACT Through two complementary and exploratory studies -one qualitative and one quantitative -this research aims to understand the ways in which lower-middle-class families in Brazil manage their household finances. The study proposes an integrated framework that brings together various previously disconnected theoretical fragments. Based on a survey with a sample of 165 lower-middle-class female consumers of a retail company in São Paulo, we explored and tested, via a quantitative study, how antecedents such as personal characteristics affect the financial management process, as well as its consequences, either negatively as defaults or positively as savings. The model calibration and analysis were derived from a series of regression analyses. The results revealed the mediator role that financial management plays in the relationship between personal characteristics and defaults and savings. Compared to previous studies with consumers of more affluent countries, we identified peculiar findings among Brazilian lower-middle-class consumers: inadequate attention to control, weak or no focus on short-or long-range planning, widespread absence of budget surplus, and influence of critical events on episodes of default.KEYWORDS | Household financial management, mental budget, default, savings, Brazilian lower-middle-class. RESUMO PALAVRAS-CHAVE | Gestão das finanças domésticas, orçamento mental, inadimplência, poupança, classe média baixa brasileira. RESUMEN Mediante dos estudios exploratorios complementarios -uno cualitativo y otro cuantitativo-, la presente investigación tiene como objetivo entender los medios por los cuales las familias de clase media-baja brasileña RAE-Revista de Administração de Empresas | FGV-EAESP

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Section: Mental Budgetmentioning

confidence: 99%

Section: Mental Budgetmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Antecedents and Consequences of Household Financial Management in Brazilian Lower-Middle-Class

Miotto

Parente

2015

Rev. adm. empres.

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Mental accounting matters

Thaler

1999

J. Behav. Decis. Making

2,370

444

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Mental accounting is the set of cognitive operations used by individuals and households to organize, evaluate, and keep track of financial activities. Making use of research on this topic over the past decade, this paper summarizes the current state of our knowledge about how people engage in mental accounting activities. Three components of mental accounting receive the most attention. This first captures how outcomes are perceived and experienced, and how decisions are made and subsequently evaluated. The accounting system provides the inputs to be both ex ante and ex post cost–benefit analyses. A second component of mental accounting involves the assignment of activities to specific accounts. Both the sources and uses of funds are labeled in real as well as in mental accounting systems. Expenditures are grouped into categories (housing, food, etc.) and spending is sometimes constrained by implicit or explicit budgets. The third component of mental accounting concerns the frequency with which accounts are evaluated and ‘choice bracketing’. Accounts can be balanced daily, weekly, yearly, and so on, and can be defined narrowly or broadly. Each of the components of mental accounting violates the economic principle of fungibility. As a result, mental accounting influences choice, that is, it matters. Copyright © 1999 John Wiley & Sons, Ltd.

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Framing, Loss Aversion, and Mental Accounting

Soman

2004

Blackwell Handbook of Judgment and Decision Making

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Mental Budgeting and Consumer Decisions

Cited by 618 publications

References 17 publications

Antecedents and Consequences of Household Financial Management in Brazilian Lower-Middle-Class

Antecedents and Consequences of Household Financial Management in Brazilian Lower-Middle-Class

Mental accounting matters

Framing, Loss Aversion, and Mental Accounting

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