The mind of money: Mental accounting theory checks out

What happened

First introduced decades ago, the influential concept of mental accounting posits that consumers make decisions based on subjective accounts that diverge from objective financial values. One is seen as earned, and the other as a discretionary bonus.

When it comes to money, humans are not always rational. For example, consumers perceive a $100 check for overtime work differently than a $100 tax refund.

Key facts

• First — introduced: decades ago, the influential concept of mental accounting posits that consumers make decisions based on subjective accounts that diverge from objective financial values