Two experiments with undergraduates as subjects tested explanations of how
a prior temporary income change influences choices between buying and defer
red buying. In Experiment 1 predictions from the behavioral life-cycle theo
ry (Shefrin & Thaler, 1988), the renewable resources model (Linville & Fisc
her, 1991) and the loss-sensitivity principle (Garling & Romanus, 1997) wer
e contrasted. The results are inconsistent with the latter two explanations
since the framing of buying as positive (buying a new model of a product)
or negative (replacing a broken product) did not interact with the income c
hange. Congruent with the behavioral life-cycle theory, willingness to buy
was greater when subjects received a temporary income increase than when th
ey received a temporary income decrease although total assets were equal. F
urther support for the behavioral life-cycle theory is obtained in Experime
nt 2 where four income-change conditions and durable and nondurable goods a
re compared. (C) 1999 Elsevier Science B.V. All rights reserved.