Behavioural Economics Primer: Mental accounting
Behavioural economics
This article is part of Warc's Behavioural Economics Primer.
The concept of mental accounting, first identified by the economist Richard Thaler, shows how we have a natural inclination to organise, evaluate and keep track of our finances. We categorise, compartmentalise and treat money differently depending on where it comes from, where it is kept, or how it is spent.
In its simplest form, mental accounting is about considering how people think about money by trying to understand the psychology behind spending and saving and examining...