Mental accounting on Wall Street

The bonuses are smaller–even $0!–but the regular paychecks are bigger.

Even though employees will receive roughly the same amount of money, the psychological blow of not getting a bonus is substantial, especially in a Wall Street culture that has long equated success and prestige with bonus size. So there are sure to be plenty of long faces on employees across the financial sector who have come to expect a bonus on top of their base pay. Wall Streeters typically find out what their bonuses will be in January, with the payout coming in February.

One executive, whose firm prohibited discussing the topic with the news media, said the bump in base salaries had confused people, even though their overall compensation was the same. “People expect a big bonus,” this person said. “It is as if they don’t even see their base doubled last year.”

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  • Heidi

    How interesting–we get so locked into keeping our money in different categories in our minds, it throws us off when money is shifted from one psychological “pot” to another.
    -Heidi Beckman (www.pocketchangebook.com)

  • Vaneyu1976

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  • http://twitter.com/financialsamura Financial Samurai

    You guys work on Wall St.?