critical for retirement.

Another area that seems illogical is the idea of mental accounting, or putting dollars in different mental
152 6 • Consumer Choices

categories where they take different values. Economists typically consider dollars to be fungible, or having

equal value to the individual, regardless of the situation.

You might, for instance, think of the $25 you found in the street differently from the $25 you earned from three

hours working in a fast food restaurant. You might treat the street money as “mad money” with little rational

regard to getting the best value. This is in one sense strange, since it is still equivalent to three hours of hard

work in the restaurant. Yet the “easy come-easy go” mentality replaces the rational economizer because of the

situation, or context, in which you attained the money.

In another example of mental accounting that seems inconsistent to a traditional economist, a person could
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