The Gender Psychology of Mental Accounting Financial Decision Making

Mental accounting is the concept that was coined by Richard Thaler [Thaler 2015] based on the principle that people treat money and financial decisions differently depending on the source and/or intended use of money. For example, earned money may be treated differently to money won from a lottery. This paper will discuss the differences across gender in mental accounting use by breaking down differences using the Big Five traits (and 10 extensions). From these traits and extensions, overall, based on previous experimental data, and current survey data there do exist differences in gender which can lead to different predictions. It is the viewpoint of this paper that females are less likely to use mental accounting as females are more likely to have traits that are not associated with mental accounting. For males, the conclusions on mental accounting use are more ambiguous but lean towards the direction of more mental accounting than females. From a classical economics viewpoint, females are more likely to fit into the definition of rationality (as defined by the traits) and therefore have less tendency to use mental accounting.