Consequences and causes of use of broad or narrow categories in budgeting and planning

Tran, An Thi Khuong

Graduate Thesis Or Dissertation

Consequences and causes of use of broad or narrow categories in budgeting and planning Public Deposited

Analytics

Citations

Citeable URL: https://scholar.colorado.edu/concern/graduate_thesis_or_dissertations/fq977v005

Abstract

Individuals have to plan for the use of their resources (e.g., time, money, etc.) daily. Factors that affect how individuals plan and the accuracy of their plans have been topics of interests for researchers. Recent research suggests that one such factor is how much one plans. Interestingly, evidence suggests that the more one plans, the less accurate one’s predictions of one’s use of resources are. Much of this research has focused on demonstrating this tendency when one plans for and uses one’s time. I explore this tendency in the financial domain by studying the relations between how detailed one’s budget is, and how well one’s budget predicts one’s expenses. In the first half of the dissertation, using category size as one measure of how detailed one’s budget is, I find evidence that the more detailed one’s budgets are, the less accurately they predict one’s spending. In the second half of my dissertation, broadening my research to both the temporal and financial domains, I take on two major related questions. First, what determines the level of categorization consumers endogenously choose? Second, are consumers motivated to see things in a way that tells them that they have more spare resources for things they like? I find that consumers’ liking for products or activities affects the level of categorization consumers endogenously choose. Consumers tend to delude themselves that they have more spare time for activities that they like strongly. But people with low propensity to plan indulge in this delusion more than people with high propensity to plan.

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