treating SNAP funds as fungible with non-SNAP funds, and we support this claim with formal tests of fungibility that allow different households to have different consumption functions" Put differently, their data supports Thaler's (and the concept of mental accounting's) claim that the principle of fungibility is often violated in practice. Furthermore, they find SNAP to be very effective, calculating a marginal propensity to consume SNAP-eligible food (MPCF) out of benefits received by SNAP of 0.5 to 0.6. This is much higher than the MPCF out of cash transfers, which is usually around 0.1. Clearly, mental accounting is leveraged by SNAP to make it a more effective policy. Authors Emmanuel Farhi and Xavier Gabaix examine the implications of mental accounting for taxation in their paper: Optimal Taxation with Behavioral Insights. The authors main goal is to revisit the three pillars of optimal taxation, and add a behavioral twist to them which tries to incorporate mental accounting (as well as misperceptions and internalities). They reach a number of novel economic insights, showing how to incorporate nudges in the optimal taxation frameworks, and challenging the Diamond-Mirrlees productive efficiency result and the Atkinson-Stiglitz uniform commodity taxation proposition, finding they are more likely to fail with behavioral agents. In the paper Public vs. Private Mental Accounts: Experimental Evidence from Savings Groups in Colombia, Luz Magdalena Salas shows how mental accounting can be exploited to help nudge people towards saving more. In the randomized control trial that she runs, we see that labeling savings goals in different ways can lead to different levels of success in achieving savings goals. Further, the power of this labeling effect differs based on the saving success that people were having to begin with. Mental accounting plays a powerful role in our decision-making processes. It is important for public policy experts, researchers, and policy-makers continue to explore the ways that it can be utilized to benefit public welfare. See also Decision making Behavioral economics Framing effect (psychology) Micropayment Preference Psychological pricing Transaction cost Sunk cost References Bibliography Behavioral finance