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Influence of motivated reasoning on saving and spending decisions

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  • Mishra, Himanshu
  • Mishra, Arul
  • Rixom, Jessica
  • Chatterjee, Promothesh

Abstract

The decision to save enhances well-being in the long-term but it conflicts with the desire to spend money to gain immediate gratification. In this research, we examine the influence of having single versus multiple accounts on individuals’ savings and spending decisions. We find that individuals save more with a single account than with multiple liquid accounts. Utilizing work on motivated reasoning and fuzzy-trace theory, we suggest that multiple accounts engender fuzzy gist representations, making it easier for people to generate justifications to support their desired spending decisions. However, a single account reduces the latitude for distortion and hinders generation of justifications to support desirable spending decisions. Across four studies that provide participants with the opportunity to earn, spend, and save money, we demonstrate the proposed effect and test the underlying process.

Suggested Citation

  • Mishra, Himanshu & Mishra, Arul & Rixom, Jessica & Chatterjee, Promothesh, 2013. "Influence of motivated reasoning on saving and spending decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 121(1), pages 13-23.
    • Handle: RePEc:eee:jobhdp:v:121:y:2013:i:1:p:13-23
    DOI: 10.1016/j.obhdp.2012.10.003
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    References listed on IDEAS

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