Accounting, Relational

Relational accounting refers to the ways in which social relations generate practices of recording, categorizing, and evaluating financial activities and how these practices influence the financial choices of individuals. An understanding of these practices matters for social scientists because they have been shown to lead individuals to violate some of the central tenets of classic economic theory—namely, consistency of preferences, utility maximization, and the fungibility of money.

For example, take the oft-cited case of Christmas savings clubs. The economist Richard Thaler (1999) describes how they work:

In November (usually Thanksgiving) a customer opens an account at her local bank and commits herself to depositing a given amount each week for the next year. Funds cannot be withdrawn until a year later, when the total amount is ...

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