What is mental accounting?

Modern economic theory is largely based on the fact that they are reasonable and objective decisions of consumers. However, studies have shown that the mental accounting of the color of the decision -making process about expenditure and investment possibilities. Mental accounting is a process of compartmenting various investments or expenditure and considers different sections as separate and unrelated to others. For example, if an individual buys a latte for $ 4 and will randomly spill it, it will be highly resistant to buying another, but will have no problem buying gasoline $ 4. Although dollar amounts of purchases are identical, buying more coffee for $ 4 is unnecessary for consumers, but buying gasoline worth $ 4 is acceptable to it.

Consumers deal with mental accounting on the basis of purely subjective reasons, such as the intention for each account of Neozdroj Money. For example, when consumers receive money for a gift toBirthday, what they do with money can depend on what the donor said was the intention of money. If the donor stated that the money was on a college fund, the consumer is likely to save it. On the other hand, if the donor has expressed that the recipient should go out and spend it on something entertaining, the recipient will do so, even if he owes back money for rent. Some people save money they make and attribute more value to him, but easily spend the money they receive from others, considered to be another treatment.

Mental accounting can significantly affect investments and banking. For example, investors can spend a lot of time and effort by maintaining two portfolios, one for "safe" investments and the other for risky investments. In fact, the risk is the same whether the accounts are independent or together. Maintaining two types of investment in a single portfolio allows the investor to more efficiently balance the objectives of risk alleviating and improving revenue. Similarly, consumers can maintain a high -levelThe Kolský Fund in a low -yield savings account while mounting a picky account for a high interest credit card.

Economists agree that money is interchangeable, regardless of origin or purpose. Money received as a gift or a refund is no different from the money earned. Returning of outstanding debt can improve the economic perspective more than maintaining a low -interest savings account. Increased awareness of the impact of mental accounting through behavioral financing studies can help consumers avoid careless expenses of "found" money and irrational shopping and investment decisions.