What are your thoughts on the "Wealth Effect"?

I am reading an article, it states that the wealth effect is a psychological response to wealth which results in a change in consumer behavior. It boils down to the fact that when consumers are given more money they are more likely to spend it. I assume it is similar to how you feel when you get a tax refund - you feel as if you got free money so you are more likely to splurge. Whereas if you earn money because you worked for it, you are more likely to save it. Does the wealth effect work though?