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

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  • Glden lkmen
  • Manoj Thomas
  • Vicki G. Morwitz

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. (c) 2008 by JOURNAL OF CONSUMER RESEARCH, Inc..

Suggested Citation

  • Glden lkmen & Manoj Thomas & Vicki G. Morwitz, 2008. "Will I Spend More in 12 Months or a Year? The Effect of Ease of Estimation and Confidence on Budget Estimates," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 35(2), pages 245-256, March.
    • Handle: RePEc:oup:jconrs:v:35:y:2008:i:2:p:245-256
    DOI: 10.1086/587627
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    Cited by:

    1. Tam, Leona & Dholakia, Utpal M., 2011. "Delay and duration effects of time frames on personal savings estimates and behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 114(2), pages 142-152, March.
    2. 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.
    3. Santana, Shelle & Thomas, Manoj & Morwitz, Vicki G., 2020. "The Role of Numbers in the Customer Journey," Journal of Retailing, Elsevier, vol. 96(1), pages 138-154.
    4. Miaolei (Liam) Jia & Xiuping Li & Aradhna Krishna & Lisa E Bolton & Darren W Dahl & Margaret C Campbell, 2020. "Contraction with Unpacking: When Unpacking Leads to Lower Calorie Budgets [See What You Want to See: Motivational Influences on Visual Perception]," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 46(5), pages 853-870.
    5. Ziano, Ignazio & Villanova, Daniel, 2022. "Spontaneous anchors bias consumers’ divisions, judgments, and behavior," Journal of Economic Psychology, Elsevier, vol. 92(C).
    6. Li, Jianbin & Liu, Lang & Luo, Xiaomeng & Zhu, Stuart X., 2023. "Interactive bundle pricing strategy for online pharmacies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    7. Yuanchun Jiang & Jennifer Shang & Chris F. Kemerer & Yezheng Liu, 2011. "Optimizing E-tailer Profits and Customer Savings: Pricing Multistage Customized Online Bundles," Marketing Science, INFORMS, vol. 30(4), pages 737-752, July.
    8. Tuk, Mirjam A. & Verlegh, Peeter W.J. & Smidts, Ale & Wigboldus, Daniël H.J., 2019. "You and I have nothing in common: The role of dissimilarity in interpersonal influence," Organizational Behavior and Human Decision Processes, Elsevier, vol. 151(C), pages 49-60.
    9. Amasino, Dianna R. & Dolgin, Jack & Huettel, Scott A., 2023. "Eyes on the account size: Interactions between attention and budget in consumer choice," Journal of Economic Psychology, Elsevier, vol. 97(C).

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