Abigail B. Sussman

Axe the Tax: Taxes Are Disliked More than Equivalent Costs

Tax collection is critical for the proper functioning of society. However, many people strongly dislike paying taxes. Although this distaste could be rational on economic grounds, the authors show that this attitude extends beyond simply disliking the costs incurred and affects behavior in coun-ternormative ways. They demonstrate the phenomenon of tax aversion: a desire to avoid taxes per se that exceeds the rational economic motivation to avoid a monetary cost. Across five experiments, the authors provide evidence that people have a stronger preference to avoid tax-related costs than to avoid equal-sized (or larger) monetary costs unrelated to taxes. Tax aversion affects consumer preferences in a variety of domains, including standard store purchases, financial investments, and job selection. Furthermore, this tendency is most prevalent among people who identify with political parties that generally favor less taxation. Finally, encouraging participants who identify with “antitax” parties to consider positive uses of their tax payments mitigates tax aversion. This article concludes with a discussion of the implications of these results for consumer behavior research and tax policies.

Republicans Prefer Republican-Looking Leaders Political Facial Stereotypes Predict Candidate Electoral Success Among Right-Leaning Voters

Previous research suggests that voting in elections is influenced by appearance-based personality inferences (e.g., whether a political candidate has a competent-looking face). However, since voters cannot objectively evaluate politicians’ personality traits, it remains to be seen whether appearance-based inferences about a characteristic continue to influence voting when clear information about that characteristic is available. The authors examine the impact of appearance-based inferences for a characteristic that is well known about candidates: their political affiliation. Across two studies, the authors show that U.S. candidates facing conservative electorates benefit from looking more stereotypically Republican than their rivals (controlling for gender, ethnicity, and age). In contrast, no relationship between political facial stereotypes and voting is found for liberal electorates (using identical controls). The authors further show that this contrast between liberal and conservative electorates has more to do with individual-level differences between liberal and conservative voters than with macro-level differences between liberal and conservative states.

The Exception Is the Rule: Underestimating and Overspending on Exceptional Expenses

Purchases fall along a continuum from ordinary (common or frequent) to exceptional (unusual or infrequent), with many of the largest expenses (e.g., electronics, celebrations) being the most exceptional. Across seven studies, we show that, while people are fairly adept at budgeting and predicting how much they will spend on ordinary items, they both underestimate their spending on exceptional purchases overall and overspend on each individual purchase. Based on the principles of mental accounting and choice bracketing, we show that this discrepancy arises in part because consumers categorize exceptional expenses too narrowly, construing each as a unique occurrence and consequently overspending across a series of discretely exceptional expenses. We conclude by proposing an intervention that diminishes this tendency by helping consumers consider their spending on exceptional items as part of a larger set of purchases.

Harry Potter and the sorcerer's scope: latent scope biases in explanatory reasoning

What makes a good explanation? We examine the function of latent scope, i.e., the number of unobserved phenomena that an explanation can account for. We show that individuals prefer narrow latent scope explanations—those that account for fewer unobserved effects—to broader explanations. In Experiments 1a–d, participants found narrow latent scope explanations to be both more satisfying and more likely. In Experiment 2 we directly manipulated base rate information and again found a preference for narrow latent scope explanations. Participants in Experiment 3 evaluated more natural explanations of unexpected observations, and again displayed a bias for narrow latent scope explanations. We conclude by considering what this novel bias tells us about how humans evaluate explanations and engage in causal reasoning.

Framing charitable donations as exceptional expenses increases giving.

Many articles have examined the psychological drivers of charitable giving, but little is known about how people mentally budget for charitable gifts. The present research aims to address this gap by investigating how perceptions of donations as exceptional (uncommon and infrequent) rather than ordinary (common and frequent) expenses might affect budgeting for and giving to charity. We provide the first demonstration that exceptional framing of an identical item can directly influence mental budgeting processes, and yield societal benefits. In 5 lab and field experiments, exceptional framing increased charitable behavior, and diminished the extent to which people considered the effect of the donation on their budgets. The current work extends our understanding of mental accounting and budgeting for charitable gifts, and demonstrates practical techniques that enable fundraisers to enhance the perceived exceptionality of donations.

Knowing When to Spend: Unintended Financial Consequences of Earmarking to Encourage Savings

Maintaining savings is an important financial goal. Yet there are times when savings should be spent, such as when people face unavoidable costs, and spending their savings allows them to avoid high interest rate debt. Existing behavioral research has focused on consumer decisions between savings and discretionary spending and has proposed interventions to promote savings in these contexts. However, when spending is not discretionary, such interventions could risk exacerbating a pattern found in economic research in which people borrow high interest rate debt while maintaining savings that earn low levels of interest. To examine how mental accounting interacts with considerations of personal responsibility and guilt to contribute to this pattern, this article explores whether people spend their savings when they need money most: during emergencies. Six studies reveal that peoples tendency to preserve savings by borrowing from a high interest rate credit option varies as a function of the savings’ intended use. Paradoxically, people are most likely to turn to high interest rate credit with the belief that doing so is the responsible option.

Leveraging Psychological Insights to Encourage the Responsible Use of Consumer Debt

U.S. consumers currently hold

Many behavioral tendencies associated with right-leaning (conservative) political ideologies are malleable and unrelated to negativity.

880 billion in revolving debt, with a mean household credit card balance of approximately

Negative Responses to Taxes: Causes and Mitigation

6,000. Although economic factors play a role in this societal issue, it is clear that psychological forces also affect consumers’ decisions to take on and maintain unmanageable debt balances. We examine three psychological barriers to the responsible use of credit and debt. We discuss the tendency for consumers to (a) make erroneous predictions about future spending habits, (b) rely too heavily on values presented on billing statements, and (c) categorize debt and saving into separate mental accounts. To overcome these obstacles, we urge policymakers to implement methods that facilitate better budgeting of future expenses, modify existing credit card statement disclosures, and allow consumers to easily apply government transfers (such as tax credits) to debt repayment. In doing so, we highlight minimal and inexpensive ways to remedy the debt problem.

Does Knowing Your FICO Score Change Financial Behavior? Evidence from a Field Experiment with Student Loan Borrowers

Recent research has identified several judgment and decision making tendencies associated with right-leaning political ideologies that are difficult (if not impossible) to explain in terms of stable, negative affective appraisals because they (1) are uncorrelated with the negativity of the stimuli being considered, (2) do not reflect divergent affective evaluations, and (3) can be eliminated by superficial manipulations and interventions.