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Professor Rebecca W. Hamilton
Michael G. and Robin Psaros Chair in Business Administration
Professor of Marketing
McDonough School of Business
Georgetown University

ABSTRACT

We examine the impact of within-household income inequality on the joint spending decisions of romantic partners. Across five studies examining both real spending data and willingness to pay, we demonstrate that within-household income inequality, moderated by total household income, significantly influences the couple’s perceived household financial well-being and joint spending decisions. For couples with relatively high household income, greater within-household income inequality induces a promotion orientation, increasing salience of the higher of the two incomes, which further increases feelings of household financial well-being and spending on joint consumption. However, for couples with relatively low household income, income inequality induces a prevention orientation, increasing salience of the lower of the two incomes, which further decreases perceived household financial well-being and spending. Illustrating this mechanism, shifting couples’ attention to their total household income prior to making spending decisions attenuates the effect. Our findings demonstrate that within-household income inequality can influence perceived financial well-being as a household and impact spending decisions, leading couples to spend more or less than they would if they were focusing on their economic ability to pay.