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How consumers budget

Author

Listed:
  • Zhang, C. Yiwei
  • Sussman, Abigail B.
  • Wang-Ly, Nathan
  • Lyu, Jennifer K.

Abstract

Although budgeting is widely considered a common method of managing household finances, surprisingly little is known about the budgeting process. Using a nationally-representative survey (N=3,826) of US adults, we examine budgeting behaviors and beliefs, including who budgets and why, how individuals categorize consumption, and how they adjust their behavior after over- or under-spending. We identify five facts that illuminate key features of budgeting and supplement findings with administrative data (N=194,678) from a large financial institution in Australia. Understanding systematic patterns in how individuals and households budget can serve a critical role in informing economic models of consumption-savings behavior.

Suggested Citation

  • Zhang, C. Yiwei & Sussman, Abigail B. & Wang-Ly, Nathan & Lyu, Jennifer K., 2022. "How consumers budget," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 69-88.
    • Handle: RePEc:eee:jeborg:v:204:y:2022:i:c:p:69-88
    DOI: 10.1016/j.jebo.2022.09.025
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    More about this item

    Keywords

    Budgeting; Mental accounting; Consumer finance;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G50 - Financial Economics - - Household Finance - - - General

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