Will I Spend More in 12 Months or a Year? The Effect of Ease of Estimation and Confidence on Budget Estimates

46 Pages Posted: 3 Aug 2009

See all articles by Gülden Ülkümen

Gülden Ülkümen

University of Southern California

Manoj Thomas

Cornell University - Samuel Curtis Johnson Graduate School of Management

Vicki Morwitz

New York University (NYU) - Department of Marketing

Date Written: August 2008

Abstract

Consumers’ budgets are influenced by the temporal frame used for the budget period. Budgets planned for the next month are much lower than recorded expenses, while those for the next year are closer to recorded expenses (study 1). The difficulty of estimating budgets for the next year imparts low confidence, and leads to upward adjustment. When consumers’ confidence in their estimates is increased (study 2), when their natural beliefs about the relationship between cognitive ease and accuracy are reversed (study 3), or when cognitive resources are constrained (study 4), consumers no longer adjust their budgets upward for the next year.

Keywords: cognitive processes, economic psychology, judgment and decision making, time, experimental design and analysis, mental accounting, framing, budgeting, anchoring and adjustment

JEL Classification: M30, M31, M10, M00

Suggested Citation

Ulkumen, Gulden and Thomas, Manoj and Morwitz, Vicki, Will I Spend More in 12 Months or a Year? The Effect of Ease of Estimation and Confidence on Budget Estimates (August 2008). Journal of Consumer Research, Vol. 35, August 2008, Available at SSRN: https://ssrn.com/abstract=1440421

Gulden Ulkumen (Contact Author)

University of Southern California ( email )

701 Exposition Boulevard
Hoffman Hall 516
Los Angeles, CA 90089
United States
(213) 740-3852 (Phone)
(213) 740-7828 (Fax)

HOME PAGE: http://mymarshall.usc.edu/portal/subapps/digitalmeasures/faculty.jsp?surveyId=890407

Manoj Thomas

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

353 Sage Hall
Ithaca, NY 14853
United States
607-255-7207 (Phone)
607-254-4590 (Fax)

HOME PAGE: http://forum.johnson.cornell.edu/faculty/mthomas/

Vicki Morwitz

New York University (NYU) - Department of Marketing ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
220
Abstract Views
1,530
rank
153,503
PlumX Metrics