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Evidence for Opportunity Cost Neglect in the Poor
Author(s) -
Plantinga Arnoud,
Krijnen Job M.T.,
Zeelenberg Marcel,
Breugelmans Seger M.
Publication year - 2018
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/bdm.2041
Subject(s) - opportunity cost , neglect , economics , experiential learning , set (abstract data type) , public economics , microeconomics , marketing , business , actuarial science , psychology , computer science , mathematics education , psychiatry , programming language
People often neglect opportunity costs: They do not fully take into account forgone alternatives outside of a particular choice set. Several scholars have suggested that poor people should be more likely to spontaneously consider opportunity costs, because budget constraints should lead to an increased focus on trade‐offs. We did not find support for this hypothesis in five high‐powered experiments (total N = 2325). The experiments used different products (both material and experiential) with both high and low prices (from $8.50 to $249.99) and different methods of reminding participants of opportunity costs. High‐income and low‐income participants showed an equally strong decrease in willingness to buy when reminded of opportunity costs, implying that both the rich and the poor neglect opportunity costs. © 2017 The Authors Journal of Behavioral Decision Making Published by John Wiley & Sons Ltd.