The Framing of Financial Windfalls and Implications for Public Policy

12 Pages Posted: 27 Jan 2008

See all articles by Nicholas Epley

Nicholas Epley

University of Chicago - Booth School of Business

Ayelet Gneezy

University of California, San Diego (UCSD) - Rady School of Management

Abstract

Governments, employers, and companies provide financial windfalls to individuals with some regularity. Recent evidence suggests the framing (or description) of these windfalls can dramatically influence their consumption. In particular, objectively identical income described as a positive departure from the status quo (e.g., as a bonus) is more readily spent than income described as a return to the status quo (e.g., as a rebate). Such findings are consistent with psychological accounts of decision making and should supplement existing economic models. These results have important implications for the marketing of such windfalls, and discussion focuses particularly on implications for government tax policies.

Keywords: rebates, consumers

Suggested Citation

Epley, Nicholas and Gneezy, Ayelet, The Framing of Financial Windfalls and Implications for Public Policy. Journal of Socio-Economics, 2006. Available at SSRN: https://ssrn.com/abstract=1087434

Nicholas Epley (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Ayelet Gneezy

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

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