This article provides an overview of recent advances in the literature on mental accounting within the context of consumer financial decision‐making. We first discuss the categorization process that underlies mental accounting and the methods people use to categorize funds. We then highlight some of the notable work that examines how mental accounting influences budgeting, spending, and investment decisions. The article concludes by proposing an agenda for future research, focusing on current gaps in our knowledge and promising areas to explore.

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What motivates the rich and powerful to exhibit generosity? We explore this important question in a large field experiment. We solicit donations from 32,174 alumni of an Ivy League university, including thousands of rich and powerful alumni. Consistent with past psychology research, we find that the rich and powerful respond dramatically, and differently than others, to being given a sense of agency over the use of donated funds. Gifts from rich and powerful alumni increase by 100%–350% when they are given a sense of agency. This response arises primarily on the intensive margin with no effect on the likelihood of donating. Results suggest that motivating the rich and powerful to act may require tailored interventions. This paper was accepted by Uri Gneezy, behavioral economics.