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Opportunity cost neglect: a meta-analysis

Author

Listed:
  • Allegra Maguire

    (Linköping University)

  • Emil Persson

    (Linköping University)

  • Gustav Tinghög

    (Linköping University
    Linköping University)

Abstract

In a seminal paper, Frederick et al. (J Consum Res 36:553–561, 2009) showed that people’s willingness to purchase a consumer good declined dramatically when opportunity costs were made more salient (Cohen’s d = 0.45–0.85). This finding suggests that people normally do not pay sufficient attention to opportunity costs and as a result make poorer and less efficient decisions, both in private and public domains. To critically assess the strength of opportunity cost neglect, we carried out a systematic review and a meta-analysis including published and non-published experimental work. In total, 39 experimental studies were included in the meta-analysis (N = 14,005). The analysis shows a robust significant effect (Cohen’s d = 0.22; p

Suggested Citation

  • Allegra Maguire & Emil Persson & Gustav Tinghög, 2023. "Opportunity cost neglect: a meta-analysis," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 9(2), pages 176-192, December.
    • Handle: RePEc:spr:jesaex:v:9:y:2023:i:2:d:10.1007_s40881-023-00134-6
    DOI: 10.1007/s40881-023-00134-6
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    References listed on IDEAS

    as
    1. Shane Frederick & Nathan Novemsky & Jing Wang & Ravi Dhar & Stephen Nowlis, 2009. "Opportunity Cost Neglect," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 36(4), pages 553-561, December.
    2. Daniel Read & Christopher Y. Olivola & David J. Hardisty, 2017. "The Value of Nothing: Asymmetric Attention to Opportunity Costs Drives Intertemporal Decision Making," Management Science, INFORMS, vol. 63(12), pages 4277-4297, December.
    3. Persson, Emil & Erlandsson, Arvid & Slovic, Paul & Västfjäll, Daniel & Tinghög, Gustav, 2022. "The prominence effect in health-care priority setting," Judgment and Decision Making, Cambridge University Press, vol. 17(6), pages 1379-1391, November.
    4. Persson, Emil & Tinghög, Gustav, 2020. "Opportunity cost neglect in public policy," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 301-312.
    5. Fetherstonhaugh, David & Slovic, Paul & Johnson, Stephen & Friedrich, James, 1997. "Insensitivity to the Value of Human Life: A Study of Psychophysical Numbing," Journal of Risk and Uncertainty, Springer, vol. 14(3), pages 283-300, May-June.
    6. Erlandsson, Arvid & Lindkvist, Amanda & Lundqvist, Kajsa & Andersson, Per A. & Dickert, Stephan & Slovic, Paul & Västfjäll, Daniel, 2020. "Moral preferences in helping dilemmas expressed by matching and forced choice," Judgment and Decision Making, Cambridge University Press, vol. 15(4), pages 452-475, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Opportunity cost; Opportunity cost neglect; Behavioural economics; Systematic review; Meta-analysis;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D10 - Microeconomics - - Household Behavior - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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