Emotional Accounting: How Feelings About Money Influence Consumer Choice

Journal of Marketing Research, Vol. 46, pp. 66-80, February 2009

15 Pages Posted: 17 Feb 2010

See all articles by Jonathan Levav

Jonathan Levav

Columbia Business School - Marketing

A. Peter McGraw

University of Colorado at Boulder - Department of Marketing

Date Written: February 2009

Abstract

Mental accounting posits that people track their expenditures using cognitive categories or “mental accounts.” The authors propose that this cognitive process can be complemented by an approach that examines how feelings about a sum of money, or the money’s “affective tag,” influence its consumption. When people receive money under negative circumstances, this tag can include a negative affect component, which people aim to reduce by engaging in strategic consumption. The authors investigate two such strategies, laundering and hedonic avoidance, and demonstrate their effect on consumption of windfalls. The authors find that people avoid spending their negatively tagged money on hedonic expenditures and prefer to make utilitarian or virtuous expenditures to reduce, or “launder,” their negative feelings about the windfall. The authors call this tagging process and strategic consumption “emotional accounting.”

Keywords: Emotional Accounting, Mental Accounting, Consumer Spending, Windfalls, Behavioral Decision Theory

Suggested Citation

Levav, Jonathan and McGraw, A. Peter, Emotional Accounting: How Feelings About Money Influence Consumer Choice (February 2009). Journal of Marketing Research, Vol. 46, pp. 66-80, February 2009, Available at SSRN: https://ssrn.com/abstract=1553907

Jonathan Levav

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

A. Peter McGraw (Contact Author)

University of Colorado at Boulder - Department of Marketing ( email )

United States

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