Funny Money, Honey

I am going to narrate a few stories that will make you realise that money is not money. At least not in your mind. Mental accounting shows that individuals are far from objective when money comes into their possession. Money is treated differently, depending on the source. A couple went on a fishing trip and caught a few salmons. They packed the fish and sent it home on an airline, but the package was lost in transit. They received $300 from the airline, out of which they splurged $225 on a dinner. They had never spent that much at a restaurant before. Money is not supposed to have labels attached to it. Yet the couple behaved the way they did because in their mind, the $300 was a “windfall gain”. The extravagant dinner would not have happened, had each received an increment of $150 at their job. This story by economist Richard Thaler is used to describe mental accounting....