Understanding and neutralizing the expense prediction bias: the role of accessibility, typicality, and skewness

Consumers display an expense prediction bias in which they underpredict their future spending. The authors propose this bias occurs in large part because: 1) consumers base their predictions on typical expenses that come to mind easily during prediction, 2) taken together, typical expenses lead to a prediction near the mode of a consumer’s expense distribution rather than the mean, and 3) expenses display positive skew (with mode < mean). Accordingly, the authors also propose that prompting consumers to consider reasons why their expenses might be different than usual increases predictions – and therefore prediction accuracy – by bringing atypical expenses to mind. Ten studies (N = 6,044) provide support for this account of the bias and the “atypical intervention” developed to neutralize it.