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Validity verification of Mental Accounting in Public Goods Payment

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  • Hu Rongyu

    (Waseda University)

Abstract

Mental accounting has been applied to explain people’s consumption behavior of private goods by categorizing budgets. However, research on mental accounting of public goods payment is scarce. To provide evidence for the existence of mental accounting of public goods payment, we conducted an online experiment by following an approach similar to the classic theater ticket experiment of Tversky and Kahneman, which revealed the existence of mental accounting by positive phrase questionnaire. We used the Hometown Tax and the Resident Tax in Japan as substitutes for theater tickets, and asked respondents’ attitudes toward paying the tax by the questionnaire using positive, negative, and normative phrases. Our results were consistent across questionnaire items regardless of tone of the phrases, evincing the existence of mental accounting for the tax payment. Additionally, the results suggest that understanding the tax system may help encourage respondents to pay the tax.

Suggested Citation

  • Hu Rongyu, 2023. "Validity verification of Mental Accounting in Public Goods Payment," Working Papers 2213, Waseda University, Faculty of Political Science and Economics.
    • Handle: RePEc:wap:wpaper:2213
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    References listed on IDEAS

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    Keywords

    Mental accounting; Experiment; Public goods payment; Tax;
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