Well, right up front I'll say that I don't really know for sure. However, I've heard two explanations for this phenomenon, both of which seem plausible. Explanation 1: it's just an optical illusion. When the sun and moon are right on the horizon, they seem to be bigger because they're next to houses, trees, etc., whose smallness next to the sun/moon magnifies the latter. When the sun or moon are overhead, they are surrounded by empty space, which appears to diminish their size. This hypothesis could be easily tested by holding a ruler at arms' length and measuring the diameter of the sun/moon at several points in its transit across the sky. You'd have to be careful that the distance between your eye and ruler remained constant among measurements. Of course, with the sun,n you'd want to avoid as much as possible looking right at it!
Explanation 2: the apparent size of the sun and moon is determined by the distance their light has to travel through the atmosphere. Under this hypothesis, the atmosphere has a lensing effect which will increasingly magnify images with longer passages through the atmosphere. Light arriving from directly overhead has a shorter path than light arriving from an oblique direction, hence the apparent decline in size as the sun and moon move higher in the sky. Sorry I can't give a more definitive answer. If you do the measurements, let me know how your experiment turns out!

I've been told that although the moon and the sun look bigger when they are low on the horizon versus up high in the sky, really it is all in our minds. When the sun and moon are just rising, they appear to be close to the "ground" where there is a lot of things to compare their size with, for example, mountains, trees, etc.--things that we know the size of. When the sun and moon are way up in the sky there is nothing else around to compare the size with, other than the vast huge-looking sky. So it is really just a relative thing. Our brain interprets the size of other objects by comparing them to the things around them that we know the size of. Now, the moon is really huge all the time, right? So when it is just rising or setting and it's low on the horizon seemingly next to a mountain, which we think of as huge, then our brain tells us that the moon is huge. When there is nothing to compare the moon to, when it is way up in the sky, other than the huge sky, our brain tells us that the moon is small relative to the sky. Really, it's size has not changed at all.

Try tricking your brain by looking at a rising moon or sun upside down. Look at the moon or sun just as it rises up above the horizon, then turn your back to the moon or sun, stand with your legs spread apart a little, then bend over and look at the moon or sun from between your legs while your head is upside down. This tricks your brain and makes it re-evaluate what is up and what is down, or what is the sky and what is the ground.(quite Dr. Seuss-like, no?) Now, ask yourself if the moon or sun look any bigger than they do when they are high up in the sky. What do you think?

It's an optical illusion due to the way the brain interprets an image and estimates size. The moon subtends approximately 29.5 arcminutes in the sky. This is about the width of your little finger held at arm's length. Try this experiment: when you see the moon on the horizon, compare it's angular size to your little finger. Later when the moon is high, do the same comparison. You should find that the angular size of the moon has not changed at all.

I have seen reports that the reason the moon appears larger on the horizon due to atmospheric refraction. This is completely false; atmospheric refraction is a very small effect, and any change in angular size would have a factor of theta_(moon)=(29.5')*(1 degree/60 arcmin)*(pi/180) = 0.0086, which is small enough to neglect.

Lloyd and James Kaufman, a father and son team, recently published an article in the Proceedings of the National Academy of Sciences, answering this very question. The short answer is, simply, the horizon moon is perceived as larger because of an optical illusion. The difference is not, in fact, due to any effect of the atmosphere, as it is commonly believed.

Read the full article below for more information!



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Proceedings of the National Academy of Sciences: Vol. 97, Issue 1, 500-505, January 4, 2000

Psychology-BS Explaining the moon illusion

Lloyd Kaufman*, and James H. Kaufman

Psychology Department, Long Island University, C.W. Post Campus, 720 Northern Boulevard, Brookville, NY 11548-1309; and IBM Research Division, Almaden Research Center, 350 Harry Road, San Jose, CA 95120

Communicated by Julian Hochberg, Columbia University, New York, NY, October 25, 1999 (received for review August 23, 1999)

Abstract

An old explanation of the moon illusion holds that various cues place the horizon moon at an effectively greater distance than the elevated moon. Although both moons have the same angular size, the horizon moon must be perceived as larger. More recent explanations hold that differences in accommodation or other factors cause the elevated moon to appear smaller. As a result of this illusory difference in size, the elevated moon appears to be more distant than the horizon moon. These two explanations, both based on the geometry of stereopsis, lead to two diametrically opposed hypotheses. That is, a depth interval at a long distance is associated with a smaller binocular disparity, whereas an equal depth interval at a smaller distance is associated with a larger disparity. We conducted experiments involving artificial moons and confirmed the hypothesis that the horizon moon is at a greater perceptual distance. Moreover, when a moon of constant angular size was moved closer it was also perceived as growing smaller, which is consistent with the older explanation.

Here's something to try: When the moon is almost full again go outside and measure its size when it is rising, at around sunset. Maybe compare it to the size of your thumb when your hand is outstretched or hold a ruler between both outstretched hands. Go
outside a few hours later and measure again. Has the moon really changed size? If not, why do you think the moon looks different when closer to the horizon?

There are perhaps several reasons: the first is purely related to the psychology of perception... when the moon is low, one has something to compare its size with (i.e., objects on the horizon) and so it appears large. when high in the sky, this is not possible.
A second explanation has to do with the length of the path light follows when an object is low in the sky... the path length thru the atmosphere is greater when an object is on the horizon. One effect this has, is to scatter blue light more than red light (which has longer wave length)... hence more of the red light gets thru" and we see the object as being somewhat redder (like the giant RED RUBBER BALL SUN) . There may be some refraction effects as well that distort the image of the moon or soon related to the greater path length as well.recall that the index of refraction of the atmosphere depends on its density and that changes in the index of refraction will
bend light to different extent.

There are two processes involved here -- one psychological, and one that is physical. The moon as seen from the earth is 1/2 degree wide when at zenith. However, there are rarely any objects close to the moon from which its relative size can be guessed. When it is closer to the horizon, it appears close to far away objects of known size, and this allows a scale to be seen for the moons size. (The effect seems to depend on having a distant horizon -- the moon does not appear large in mountain valleys, presumably because the horizon is much closer.
Physically, the refraction of the earth's atmosphere causes the moon to appear flattened as it grazes the horizon, this often makes the moon appear wider (when in fact its image is just shorter). The refraction effect was first measured by Bode who noticed that stars seemed to cross the horizon later than they should -- this is due to the refraction -- the star is actually below the horizon but its image remains above for a brief time.
There is a third effect -- the moon close to the horizon is much dimmer and the light is shifted to redder colors-- making it easier to look at directly without glare. On warm summer days, the moon can appear as a yellow or even orange flattened ball on the horizon.
Recently, (Last Dec 22, 1999) the moon at full was larger (by several %) than at any time since 1866-- it did appear very bright -- but there was nothing to compare it to, high in the sky. On the horizon it did appear quite large. (At least to me...)

The sun and moon appear bigger on the horizon than high in the sky because there are other objects on the horizon to compare with the sizes of the moon and the sun. Next to a palm tree or building, the moon and sun will appear bigger. In actuality, the sizes of the moon and sun do not change. It is an optical illusion that the sun and the moon appear bigger at the horizon. If you measure the size of the moon with your thumbnail (it is not a good idea to look directly at the sun) by holding your arm straight out in front of you when the moon is at the horizon and high in the sky, you will find out that the moon is the same size at both positions.