People treat found money and earned salary as different currencies with different spending rules

Mental accounting, a concept pioneered by Nobel laureate Richard Thaler, explains why people treat money differently based on its source or intended use, despite it being a perfectly fungible asset. A 1985 study illustrated this by showing that 68 percent of people were willing to spend a surprise 'bonus' on luxuries, whereas only 43 percent would spend the same amount from their regular salary. This cognitive shortcut helps people manage self-control but often leads to inefficient spending.