Latest / Behavioral Economics with Fexingo: Decision Making, Bias, and How People Really Spend
Why Your Brain Treats Windfall Gains Differently Than Earned Income
In this episode, Lucas and Luna explore the 'windfall effect' — the psychological quirk that makes people spend found money, tax refunds, and lottery winnings more freely than hard-earned cash. They unpack a 2025 study from the Journal of Consumer Research showing that participants who received an unexpected $50 gift card spent 63% more on indulgences than those who earned the same amount through a task. The conversation digs into why this happens: the brain categorizes windfall gains into a separate mental account with looser spending rules. Lucas contrasts this with the…
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