Lecture: Marketing Professor Scott Swain
Prof. Scott Swain, Assistant Professor of Marketing at Boston University, will be the guest speaker at this week's Marketing Department Pro-Seminar. All are invited to attend.
Title: The Effect of Monetary Format on the Assignment of Windfall Income to Mental Accounts
Abstract:
This research examines how the format of a monetary windfall (i.e., cash versus gift card) interacts with mental accounting processes to influence budgeting and spending behavior. We present evidence of a "permeation" process whereby the format of a windfall influences the extent to which it is absorbed by existing mental accounts to impact incremental spending. Study 1 examines the consumption of windfalls in a field setting and finds that consumers spend greater amounts and are more likely to violate their budgets when windfalls are distributed as gift cards than as cash. Study 2 examines the underlying process and finds that cash windfalls permeate existing mental accounts and are debited from pre-determined budgets when spent, resulting in diminished incremental spending. In contrast, gift card windfalls are preserved as distinct windfall accounts, resulting in greater incremental spending. Study 3 examines additional consequences of permeation and finds that consumers exhibit greater price sensitivity when spending cash windfalls. Findings suggest that consumers are more likely to accept higher prices, spend greater amounts, and violate their budgets when shopping with gift cards.
More information about Prof. Scott Swain
