Expense Neglect in Forecasting Personal Finances

Jonathan Berman, University of Pennsylvania, USA
An T. Tran, University of Colorado, USA
John G. Lynch, University of Colorado, USA
Gal Zauberman, University of Pennsylvania, USA
We demonstrate that individuals neglect their expenses when forecasting future finances. Specifically, we show that even though people expect for their expense to increase as their income does, they consistently under-weigh the impact of expense growth compared to income growth on estimations of future available spare money.
[ to cite ]:
Jonathan Berman, An T. Tran, John G. Lynch, and Gal Zauberman (2013) ,"Expense Neglect in Forecasting Personal Finances", in NA - Advances in Consumer Research Volume 41, eds. Simona Botti and Aparna Labroo, Duluth, MN : Association for Consumer Research.