To Know and to Care: How Awareness and Valuation of the Future Jointly Shape Consumer Spending

Bartels, Daniel M.; Urminsky, Oleg

doi:10.1086/680670

Cited by 94 publications

(83 citation statements)

References 49 publications

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“…Our conclusions are related to work on consideration of opportunity costs (Bartels and Urminsky 2015;Frederick et al 2009;Spiller 2011) and earmarking (Cheema and Soman 2011;Webb and Spiller 2014). These research streams examine how potential uses of money-spontaneously generated or provided-influence spending decisions.…”

Section: Discussionmentioning

confidence: 83%

On the Mental Accounting of Restricted-Use Funds: How Gift Cards Change What People Purchase

Reinholtz¹,

Bartels²,

Parker³

2015

J Consum Res

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This article emphasizes the role of categorization in mental accounting and proposes that once a mental account is established, purchases that are highly congruent with the purpose of the mental account (i.e., typical category members) will be more preferred in selection decisions compared to purchases that are less congruent (i.e., atypical category members). This hypothesis is tested in the context of gift cards. Six studies find that people shopping with a retailer-specific gift card-and so, the authors argue, possessing a retailer-specific mental accountexpress an increased preference for products more typical of the retailer compared to those shopping with more fungible currency. This pattern is found to occur for both well-known retailers, where people already possess product-typicality knowledge, and fictional retailers, where product-typicality cues are provided. An alternative account based on semantic priming is not supported by these data. These results both broaden the contemporary understanding of how mental accounting influences preferences and provide retailers deeper insight into their customers' decision processes.Keywords: mental accounting, categorization, gift cards, mental representation M ental accounting is a framework for understanding how people label and track their money (Thaler 1985(Thaler , 1999. The present work examines the role of mental accounting in product selection decisions, arguing that the formation of a mental account can predictably change preferences for one type of product over another. Specifically, purchases most congruent with the purpose of the mental account will become more preferred. Further, congruency with the mental account can be assessed using established principles of categorization and mental representation.Our research focuses on a common situation where new mental accounts are likely to arise-the acquisition of gift cards. We argue that acquiring a gift card from a retailer (hereafter, a "retailer-specific" gift card) creates a goal to purchase from that retailer. From this premise, we build on research that argues mental accounts are formed around goals (Brendl, Markman, and Higgins 1998). Thus receiving a retail-specific gift card should trigger the intent to spend it and initiate a corresponding mental account to monitor transactions in service of this spending goal.Nicholas Reinholtz (nicholas.s.reinholtz@colorado.edu) is a postdoctoral research associate at the University of Colorado Boulder, Leeds School of Business, S442 UCB, Boulder, CO 80309. Daniel M. Bartels (bartels@uchicago.edu) is an assistant professor of marketing at the University of Chicago, 5807 S. Woodlawn Ave., Chicago, IL 60637. Jeffrey R. Parker (jeffparker@gsu.edu) is an assistant professor of marketing at Georgia State University, PO Box 3991, Atlanta, GA 30302. The authors thank Charlene Chen, Don Lehmann, Jonathan Levav, Malia Mason, Oleg Urminsky, Liad Weiss, Lawrence Williams, George Wu and his lab group, participants in a University of Colorado seminar, and members of hocag ...

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Section: Discussionmentioning

confidence: 83%

On the Mental Accounting of Restricted-Use Funds: How Gift Cards Change What People Purchase

Reinholtz¹,

Bartels²,

Parker³

2015

J Consum Res

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“…In particular, it is not clear whether the ASOC effect is due to changes in awareness of the SS opportunity cost (as we emphasize in this paper), changes in evaluations of the SS opportunity cost (e.g., perhaps people are naturally aware of it, but highlighting it makes them care more about it), or both (see Bartels and Urminsky 2015). The choice time data we reported suggest that the SS zero (or SS nothing reminder) makes information more salient to decision makers, which supports the awareness account.…”

Section: Discussionmentioning

confidence: 92%

The Value of Nothing: Asymmetric Attention to Opportunity Costs Drives Intertemporal Decision Making

2017

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T his paper proposes a novel account of impatience: People pay more attention to the opportunity costs of choosing larger, later rewards than to the opportunity costs of choosing smaller, sooner ones. Eight studies show that when the opportunity costs of choosing smaller, sooner rewards are subtly highlighted, people become more patient, whereas when the opportunity costs of choosing larger, later rewards are highlighted this has no effect. This pattern is robust to variations in the choice task, to the participant population, and to whether the choices are incentivized or hypothetical. We argue that people are naturally aware of the opportunity costs of delayed rewards but pay less attention to those associated with smaller, sooner ones. We conclude by discussing implications for theory and policy.Data, as supplemental material, are available at https://doi

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“…the non-presented options: opportunity costs). The importance of considering opportunity costs was further demonstrated by Bartels and Urminsky (2015). They found that valuing future outcomes highly is only related to decreased spending when people consider opportunity costs.…”

Section: Opportunity Costsmentioning

confidence: 99%

Evidence for Opportunity Cost Neglect in the Poor

Plantinga

Krijnen

Zeelenberg

et al. 2017

Behavioral Decision Making

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People often neglect opportunity costs: They do not fully take into account forgone alternatives outside of a particular choice set. Several scholars have suggested that poor people should be more likely to spontaneously consider opportunity costs, because budget constraints should lead to an increased focus on trade‐offs. We did not find support for this hypothesis in five high‐powered experiments (total N = 2325). The experiments used different products (both material and experiential) with both high and low prices (from $8.50 to $249.99) and different methods of reminding participants of opportunity costs. High‐income and low‐income participants showed an equally strong decrease in willingness to buy when reminded of opportunity costs, implying that both the rich and the poor neglect opportunity costs. © 2017 The Authors Journal of Behavioral Decision Making Published by John Wiley & Sons Ltd.

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To Know and to Care: How Awareness and Valuation of the Future Jointly Shape Consumer Spending

Cited by 94 publications

References 49 publications

On the Mental Accounting of Restricted-Use Funds: How Gift Cards Change What People Purchase

On the Mental Accounting of Restricted-Use Funds: How Gift Cards Change What People Purchase

The Value of Nothing: Asymmetric Attention to Opportunity Costs Drives Intertemporal Decision Making

Evidence for Opportunity Cost Neglect in the Poor

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