But that's not how we think. Instead we divide our money into "buckets" of different perceived value.
Photo by Niels Steeman on Unsplash
For example, if the price of gas goes up, people cut back on driving to save money, at significant inconvenience. Even though it would be much easier to take money from the groceries "bucket" and simply cut out a few treats to balance the budget.
Thaler's work shows us that we humans are irrational when it comes to money.
As accountants we can only tell you what the numbers are. We can't tell you how to think and feel about them.