Abstract
One source of income is used for a different expenditures or savings by the existence of mental accounting. According to Thaler(1999), mental accounting is the set of cognitive operations used by individuals and households to organize, evaluate, and keep track of financial activities. A survey of 523 people was conducted in one rural area of China on mental accounting. After analysis, results of the survey evidently show that, mental accounting exists in the households of farmers. Also, factor analysis and cluster analysis show that Incomes are grouped into 6 categories, and expenditures are grouped into 5 categories, and savings are grouped into 4 categories respectively.
