Breaking your budget? Why consumers overspend on exceptional purchases

http://www.eurekalert.org/pub_releases/2012-06/uocp-byb061912.php

Public release date: 19-Jun-2012
Contact: Mary-Ann Twist
University of Chicago Press Journals

Consumers routinely overspend on unbudgeted purchases such as birthday gifts, car repairs, or luxury chocolates because they underestimate the overall number of such "exceptional" purchases, according to a new study in the Journal of Consumer Research.

"This tendency to underbudget for so-called 'exceptional' purchases occurs because, although each purchase is unusual in isolation, when combined they tend to occur with unexpected frequency," write authors Abigail B. Sussman (Princeton University) and Adam L. Alter (Stern School of Business, New York University). "People fail to recognize just how many items fall into this exceptional category, so they spend more than they would if they realized how often they were spending on these exceptional purchases."

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