Today, the world lost Gene Hackman, who will be remembered for many legacies. But by behavioral economists, he will be best remembered for explaining mental accounting in this clip with Dustin Hoffman. What is mental accounting? A 🧵 www.youtube.com/watch?v=t96L... - ThreadSky

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katymilkman.bsky.social • 65 days ago

Today, the world lost Gene Hackman, who will be remembered for many legacies. But by behavioral economists, he will be best remembered for explaining mental accounting in this clip with Dustin Hoffman.

What is mental accounting? A 🧵

https://www.youtube.com/watch?v=t96LNX6tk0U

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katymilkman.bsky.social•65 days ago

Mental accounting is our tendency to treat resources like money and time as if they aren't fungible. We create artificial "mental accounts" to help us keep track of resources and avoid overspending. Dustin Hoffman kept jars of money with different labels (rent, food, etc.); he wouldn't take money...

katymilkman.bsky.social•65 days ago

out of a jar with one label to pay for expenses in another category. So when he ran out of food money, he went to Gene Hackman for a loan. Hackman was skeptical, however, when he saw that there was plenty of money in other jars! Thx to @rthaler.bsky.social for sharing this clip w/ us.

katymilkman.bsky.social•65 days ago

Many of us show this when we teach our students about mental accounting, which has implications for everything from taxi/Uber/Lyft drivers' tendency to set income targets to the way we respond when we're surprised with a $10 off coupon to the grocery store.

katymilkman.bsky.social•65 days ago

Here are a few papers of my favorite papers on mental accounting:
(1) Mental Accounting Matters: https://lnkd.in/eRzySJKp
(2) Labor Supply of New York City Cabdrivers: https://lnkd.in/eTqFGuQQ
(3) Mental Accounting and Small Windfalls: https://lnkd.in/eWAj5N2P

juanrive.bsky.social•65 days ago

Wonderful

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