A consumer user her phone to scan a QR code to make a purchase under the government’s co-payment plus scheme.

The “Khon La Khrueng Plus” co-payment scheme is considered one of the world’s most effective consumption stimulus programmes, founded on the principles of behavioural economics, according to an analysis by the Fiscal Policy Office (FPO).

The FPO said the scheme leverages five key human behaviours to stimulate consumption during the fourth quarter, typically a weaker period for economic growth.

The five behaviours are: present bias or hyperbolic discounting; mental accounting; loss aversion and framing (prospect theory); nudging and choice architecture; and scarcity and salience.

Behavioural economics

Present bias refers to the human tendency to overvalue immediate rewards, even at the cost of losing greater future benefits. People tend to prefer small, instant pleasures (such as spending money) over larger, delayed pleasures (such as saving for retirement).

Conversely, they often seek to postpone immediate discomfort, such as making a large payment.

The design of the co-payment scheme fully capitalises on this bias. Specifically, the immediate reward – a 50% government co-payment – is not a year-end tax rebate, but rather an instant benefit received at the very moment the transaction takes place.

For a purchase worth 300 baht, the out-of-pocket cost is borne by consumers. However, the psychological discomfort of spending is immediately reduced when the payment decreases from 300 baht to 150 baht.

The government’s 150-baht subsidy, therefore, serves as a powerful and instantaneous positive reinforcement, effectively offsetting the pain of paying the remaining 150 baht.

Moreover, the scheme’s limited time frame, which requires spending to be completed by Dec 31, creates a sense of urgency, prompting people to spend quickly out of fear of losing the government subsidy.

The second behaviour is mental accounting – the theory that individuals do not treat every unit of money as fungible, as assumed by classical economics. Money received for free is typically perceived as a bonus, making individuals more willing to spend it than their regular income.

As a consequence, the marginal propensity to consume in such cases is effectively equal to one, meaning the entire amount received tends to be spent in full.

The core idea of prospect theory is loss aversion – that the psychological pain from a “loss” is roughly twice as intense as the pleasure from a “gain” of the same magnitude.

The way a choice is framed as a “gain” (or a discount) influences decision-making. For example, a programme framed as “Let’s go halves” sounds different from “You have to pay 50%”.

At the point of sale, the users’ attention is drawn to the 50% they save, rather than the 50% they are paying (a loss).

Fear of missing out

The fear of missing out is triggered by the potential gain available to Thais. Failing to use the benefit by Dec 31 is psychologically perceived as a loss because it disappears after that date.

This perception elicits loss aversion, motivating people to spend their full allowance to avoid the “pain” of losing free money provided by the government.

Without altering the underlying economic incentives, a small nudge through co-payment participation encourages people to spend in order to receive government subsidies for goods and services, aligning with the government’s goal of stimulating the economy.

If the same support were given as cash, part of the money might be saved or used to pay off debt, which would reduce its effectiveness as an economic stimulus.

The co-payment scheme was designed using choice architecture, setting clear boundaries for spending and limiting it to registered small and medium-sized enterprises, local restaurants and domestic service providers.

The scheme excludes large franchise chains, convenience stores and online purchases from abroad, ensuring government funds are precisely directed towards targeted beneficiaries.

Moreover, since all spending occurs through a digital system, it not only facilitates transactions for users but also enables the government to monitor spending behaviour.

Scarcity and salience

Scarcity refers to limited time, which increases the perceived value of something and creates a sense of urgency.

Salience means the more visible and prominent the information is, the more likely people are to act upon it.

The scheme utilises time scarcity, running from Oct 29 to Dec 31, with a requirement to make the first purchase by Nov 11 creating a sense of urgency. This condition “pulls future consumption forward”, concentrating spending within the fourth quarter of 2025, stimulating GDP in a targeted and timely manner.

There is also budget scarcity, with a limited total budget and restricted number of available rights motivating people to register quickly to secure their participation.

The 50% discount is highly salient – a simple, powerful decision-making heuristic that consumers can instantly understand. This simplicity makes it more effective than complex, multi-step cashback programmes, according to the FPO.