Home » Budget Depreciation: When Budgeting Early Increases Spending

Budget Depreciation: When Budgeting Early Increases Spending

Budgeting in advance is a good practice to control spending. Research reported in this article, however, shows that budgeting too early for a specific purchase may increase spending. This is due to what the authors term ‘budget depreciation’, a process in which consumers adapt to the reference point set by the budget, lower their pain-of-payment from the budgeted amount, and increase their willingness-to-spend.

The post Budget Depreciation: When Budgeting Early Increases Spending appeared first on BehavioralEconomics.com | The BE Hub.

This post was originally published on this site

Leave a Reply

Your email address will not be published. Required fields are marked *