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The effects of mental budgeting and pain of payment on the financial decision making of socially excluded people

Sungyong Chun (College of Business and Economics, Dankook University – Jukjeon Campus, Yongin, South Korea)
Devon S. Johnson (The Feliciano School of Business, Montclair State University, Montclair, New Jersey, USA)

International Journal of Bank Marketing

ISSN: 0265-2323

Article publication date: 5 May 2021

Issue publication date: 6 July 2021




Consumers who experience social exclusion often prefer high-risk financial products over low-risk financial products. The aim of this study is to examine how this effect can be attenuated by applying the theories of mental budgeting and pain of payment. The authors’ aim in pursuing this research is to improve the effectiveness of financial professionals and others in educating consumers on healthy financial practices. Understanding how social exclusion experiences influence financial decision-making is essential for continued progress in consumer financial education.


The authors examine the effect of consumers experiencing social exclusion on preference for high-risk financial products using an experimental design involving the manipulation of social exclusion/inclusion experiences. Data were collected from 148 consumers of mutual fund investment services via Amazon Mechanical Turk.


The study found that consumers experiencing social exclusion are more likely to make high risk investments. It also found that this effect is moderated by consumers' level of mental budgeting such that at high levels of mental budgeting the effect of social exclusion on investment choice is attenuated. The study further finds that the moderating effect of mental budgeting is mediated by pain of payment.

Social implications

The findings of this study suggest that policymakers can reduce unduly risky personal investment behavior by triggering mental budgeting thoughts using methods such as advertising and explicit mention of transaction fees.


The present study builds on existing research demonstrating the adverse behavioral consequences of social exclusion but refines our understanding by demonstrating the attenuating effect of mental budgeting and the mediating effect of pain of payment on high risk financial purchases.



Chun, S. and Johnson, D.S. (2021), "The effects of mental budgeting and pain of payment on the financial decision making of socially excluded people", International Journal of Bank Marketing, Vol. 39 No. 5, pp. 886-899.



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