Sep 13, 2019
I’m so excited to finally talk to you about my study on
behavioral economics and increasing savings rates. In my master’s
program, I was required to do my own study and submit it to at
least one location for publication. I already had a relationship
with the Filene Research Institute, so I decided to reach out to
them before choosing the focus of my project.
Their top choices were helping people save money and increase
loyalty. A group of researchers from Duke University did an
experiment in Kenya to try and find ways to increase savings. After
six months, the surprising results were that a using a gold coin to
mark off weeks of savings outranked sentimental reminders and
matching funds. I loved these findings and wanted to see if this
could be replicated if modified for the US.
My white paper is now published, and I finally get to talk about
the study and share it with you. I was privileged to have a
conversation with Dan Ariely which helped me narrow down my three
main concepts for the study which are time discounting,
reciprocity, and a physical manifestation of savings. I hope you
enjoy the results.
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- [06:19] Publication wasn't a requirement for graduation, the
study just needed to be submitted.
- [07:27] The study done in Kenya on savings behavior stuck with
- [08:17] The gold coin was the condition that did the best. It
even did better on its own than when paired with matching
- [08:32] Finding a way to encourage saving without matching
funds is like the holy grail.
- [09:05] I was interested to see how this would translate in the
- [09:20] Problem number one was replicating the gold coin in the
- [09:53] The coin was a constant reminder to save. This needed
to be replicated at least in premise.
- [11:17] The three main concepts I wanted to focus on were time
discounting, reciprocity, and a physical manifestation of
- [12:02] We started with 240 members, who were narrowed down
based on a few factors, including age, income, and time with the
- [12:36] Filene requested we look at loyalty scores as
- [12:48] One item we used to narrow down the list was if they
had completed a Net Promoter Score survey in the six months or so
before the study began.
- [13:41] The 240 members were randomly assigned to one of three
groups. The control group received no communication at
- [15:05] We tracked savings until the Monday before Black Friday
so we wouldn’t end up with totally skewed numbers when people went
shopping after Thanksgiving.
- [15:29] I also had the previous year's data for
- [16:31] It was decided to not have the members precommit to
wanting to save or sign up for a program.
- [17:50] Two of the groups groups received communication from
the credit union talking about the importance of saving and this
new information they found on helping people to save. (The other
group was control.)
- [18:29] About a week before the planned study, the two non
control groups received a letter with very similar text. One group
also received a refrigerator magnet.
- [21:23] The magnet group’s letter also had an image of the
magnet in the corner. All envelopes were the same.
- [21:44] After 12 weeks, the 160 individuals all received an
email reminding them of the importance of saving, and letting them
know it was never too late to start or pick up where they left
- [21:52] And after the 24 weeks were over, they received an
email thanking them for participating, encouraging continued
saving, and everyone – all 240 members – received an email with an
NPS survey to see if the loyalty numbers were different after 24
- [22:55] Making the future self more tangible today is important
in combating time discounting.
- [24:15] Even though I was only using three main concepts, these
others still had to be considered and incorporated for the best
chances of adoption.
- [24:53] The hypotheses of the study were that the magnet group
would save more than either of the other two groups and that the
magnet group would have a higher increase in loyalty score than the
other two groups.
- [26:14] Physical representation is the magnet itself, which was
specifically designed to be a reminder of money and savings. The
letter only group was encouraged to make their own note and place
it somewhere to be a reminder of savings and goals.
- [26:37] Time discounting is represented in the verbiage on the
magnet, “I care about my future self” and that same verbiage was
included in the letters and emails for both groups.
- [26:50] Reciprocity was in both the “gift” of the magnet,
which was called out specifically in the language on the letter for
that group, and the less physical gift of tips to save money and
have a happier, more financially secure life.
- [28:22] The hypotheses were that the magnet group would save
more and have a bigger change in their loyalty scores over the 24
weeks. And they did!
- [29:16] The control group savings went up 1.42%. The letter
only group went up by 1.35%. The magnet group went up by
- [30:07] The most significant jump in loyalty score was by the
magnet group. They went up to 9.2.
- [30:49] The main thing to learn from this study is that the
magnet group went up in both categories, and while we cannot say
with 100% certainty it is because of the nudges, there aren’t any
other explanations that readily explain what else might have
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