Bigger Not Better: Unpacking Future Expenses Inflates Spending Predictions

People often underestimate their future personal spending. Across four studies we examined an “unpacking” intervention to reduce this bias. Participants predicted spending for an upcoming week (Study 1), a weekend (Study 2a), a vacation (Study 2b), and for weeks versus self-nominated events (Study 3), and subsequently reported actual spending. In each case, unpacking the details of expected expenses increased spending predictions. In contexts where predictions tended to be too low (Study 1, 3), unpacking eliminated underestimation bias. However, in contexts where predictions were already unbiased, unpacking introduced an overestimation bias (Study 2, 3). Unpacking appears to make predictions bigger, not necessarily better.