Classic mental accounting effects hold up across 5,589 people in 21 countries

A shopper who treats money as money should value a $5 saving the same whether the item costs $10 or $100 ^[9]. Mental accounting predicts otherwise, because people judge outcomes against subjective accounts that drift from objective values ^[5]. The Padova team gave participants that task in an online survey, along with others such as choosing between identical products at identical prices in different stores ^[3][8]. Each version was in the local language, with money amounts scaled to the country's gross national product ^[10]. The scaling is the key design choice. Without it, $5 would be a bigger or smaller gain in each economy, and any cross-country difference could come from the prices alone.

This is the first large-scale test of whether the concept replicates and generalises ^[2]. The sample averages about 266 people per country ^[17]. The press account of the paper, published in the Journal of Consumer Research ^[4], does not report effect sizes or per-country samples, so it is not possible to say from it how large the replicated effects are.

The income result is the most interesting one, and the least settled. Effects were weaker in lower-income countries ^[11]. The researchers give two readings. Part of the gap may come from history: mental accounting was first studied in higher-income countries ^[12]. Or people with less discretionary income may be more sensitive to money in any context, treating an amount the same in a small purchase or a large one ^[13]. That second reading sits awkwardly beside another finding. Household income was not associated with mental accounting, and neither were age or education ^[14]. If scarcity drove the gap, I'd expect it to show up within countries as well as between them.

Digital payments were the reason to run the test now. Overtime pay and tax rebates now usually arrive the same way, by direct deposit, and the researchers were unsure the concept would hold up ^[6]. "Considering major changes in how we receive and spend money, especially with the proliferation of automated digital payments, a large, robust study of the concept of mental accounting was not only appropriate, it was necessary," Ruggeri said ^[7].

The thing this doesn't tell you is whether payment technology changed anything. The tasks described test how people value savings and prices in hypothetical scenarios ^[8][9]. The overtime-versus-refund split, where money is labelled by where it came from, is how the concept is usually explained ^[5]. What the study establishes is that people surveyed in the direct-deposit era still give the classic answers ^[1][6].

In my view that is enough support for pricing and incentive designs built on these effects in higher-income markets ^[1][11]. Two conditions apply: the evidence is stated choice, and it is thinner where incomes are lower ^[8][11]. The effects also moved with social context, with whether people decided for themselves or for someone else, and with whether they were setting a price or evaluating one ^[15].

Ruggeri's own example, offered as an illustration of the concept, is the flexible spending account. Early in the year people put off buying glasses or medicines even with money in the account. Near the deadline they see the money as already spent, and buy ^[16]. "If we need these glasses or medications in July, buying them in December is not optimal. Additionally, retailers know about this behavior and may charge a premium for FSA-eligible products as annual deadlines approach, meaning we might pay even more," he said ^[18].