Definition & Basics
This psychological concept explains how people divide resources into mental categories.
What is mental accounting?
People may treat bonus money differently than this regular form of income.
Paycheck money
Teens divide their time into categories like study time and what other opposite category.
Free time
Choosing to save for ____ instead of paying off credit card debt is an example from the slides.
Vacation
Movies, social media, and which industry often influence mental accounting.
Ads
Mental accounting affects decisions involving which three types of resources mentioned in the slides?
Money, time, and effort
Mental accounting can cause people to spend too much money or fear losing money while doing what?
Investing/saving money
Popularity, likes, and reputation are treated like what kind of “currency”?
Social Currency
Money paid to shareholders from company earnings is called what?
A dividend
Pop culture often makes money seem “extra” or meant for what purpose?
Fun
Mental accounting causes people to mentally label and _______ things.
Separate
Saving money while still owing debt is considered what type of decision?
Irrational/poor decision
Teens may continue working hard on something because they’ve already invested what?
Effort
People may use bonuses or gambling winnings for expensive things instead of doing what responsible action?
Investing it or paying off debt
In shows or online, characters often spend bonus or gift money quickly instead of doing what?
Saving it
Instead of treating money equally, people divide it into separate mental _______.
Buckets/categories
People sometimes assign money only for savings or only for what leisure activity example from the slides?
Vacation
Treating past effort like an “investment” connects to what idea of sunk costs?
The sunk cost idea (or sunk cost thinking)
Treating “extra” money differently from regular income shows that people do not treat all money the _______.
Same
Seeing others spend freely online may influence viewers’ _______.
Decisions
Mental accounting is considered a type of what broader psychological thinking error?
Cognitive bias
Thinking of money in separate buckets instead of as one total amount can lead to what type of behavior?
Irrational behavior
Even though time is one single resource, teens mentally divide it into different _______.
Categories
Instead of reinvesting dividend income, people often do what with it?
Spend it $$
Even though pop culture frames money differently, in reality all money is the _______.
Same