Does the source of a cash flow affect spending versus saving?

Abstract

This study examines whether people use different mental accounts for different types of hypothetical revenue windfalls rather than viewing them as fungible in their use consistent with neoclassical economics. This study finds that the income source sometimes influenced the amount spent/saved and a respondent’s general default as a spender or saver was highly significant in all regressions. This article adds to the literature by responding to Epley and Gneezy’s (2007) call for “a broader sample of participants, varying amounts of payment, and alternative frames” to identify moderators of windfall framing effects with implications for behavioral economic theory and financial planning.