Comment on “Mental Accounts and Consumption Sensitivity Across the Distribution of Liquid Assets” by Graham and McDowall (2026)

• Authors: Jaime Gimeno-Ribes
• BSE Working Paper: 1551 | January 2026
• Keywords: mental accounting, marginal propensities to consume, intertemporal choice

This comment revisits “Mental Accounts and Consumption Sensitivity Across the Distribution of Liquid Assets”, by Graham and McDowall (2026), in particular the model and analysis thereof in Section IV. The analysis incurs in a contradiction between two central assumptions, thereby invalidating the reported derivations and results. A proposed “fix” avoids this mistake, but at the cost of reducing the problem to a standard life-cycle case, from which the properties of mental accounting are absent because the analysis de facto assumes them away. A final section points out the missing aspects in the analysis that are necessary to understand the model.