Fungibility, labels and consumption

Arbeitspapier

Fungibility of money is a central assumption in the theory of consumer choice: any unit of money is substitutable for another. This implies that the composition of income or wealth is irrelevant for consumption. We find in a field experiment that even in a simple, incentivized setup many subjects do not treat money as fungible. When a label is attached to a part of their budget, subjects change consumption according to the label. A controlled laboratory experiment confirms this result and further shows that subjects with lower cognitive abilities are more likely to violate fungibility. The findings lend support to behavioral models of narrow bracketing and mental accounting. One implication of our results is that in-kind benefits distort consumption more strongly than usually assumed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CeDEx Discussion Paper Series ; No. 2010-13

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Field Experiments ; Microeconomic Behavior: Underlying Principles ; Fiscal Policies and Behavior of Economic Agents: Household ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
• Subject: fungibility ; in-kind benefits ; mental accounting ; narrow bracketing ; field experiment ; laboratory experiment ; Geld ; Kognition ; Konsumentenverhalten ; Verhaltensökonomik ; Test ; Sachtransfer ; Feldforschung ; Theorie ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Abeler, Johannes ; Marklein, Felix
• Event: Veröffentlichung
• (who): The University of Nottingham, Centre for Decision Research and Experimental Economics (CeDEx)
• (where): Nottingham
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/49658
• Last update: 10.03.2025, 11:43 AM CET