Mental accounts and the marginal propensity to give

David Clingingsmith ()
Additional contact information
David Clingingsmith: Case Western Reserve University

Journal of the Economic Science Association, 2019, vol. 5, issue 2, No 3, 170-181

Abstract: Abstract Neoclassical theory holds that different sources of income are fungible at the margin. In contrast, mental accounting holds that appropriate uses for income vary by source, making them infungible. This study investigates which theory better describes giving at the margin when income may have multiple sources. Dictators accrue differing amounts of (1) earned income from a real-effort task, (2) windfall income, or (3) both. I find that dictators treat marginal earned and windfall income as partially infungible, supporting mental accounting. Dictators who had a single income source gave 14% of a marginal windfall token and 5% of a marginal earned token. Strikingly, dictators who had income from both sources were sharply less generous with each, giving only 2% and 1%, respectively. Multiple accounts enabled greater selfishness at the margin. A follow-up experiment shows that two accounts must be qualitatively different, not just multiple in number, to produce this effect.

Keywords: Mental accounts; Social preferences; Marginal income (search for similar items in EconPapers)
JEL-codes: D63 D64 D83 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s40881-019-00072-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jesaex:v:5:y:2019:i:2:d:10.1007_s40881-019-00072-2

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/40881

DOI: 10.1007/s40881-019-00072-2

Access Statistics for this article

Journal of the Economic Science Association is currently edited by Nikos Nikiforakis and Robert Slonim

More articles in Journal of the Economic Science Association from Springer, Economic Science Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().