Effect of Expressing a Quantitative Goal on Savings Behavior

Personal Finance February 07, 2017 Print Friendly and PDF

Loibl, C. & Scharff, R. L. (2010). Examining the effect of expressing a quantitative goal on consumer savings. Journal of Consumer Affairs, 44, (1): 127-154. http://dx.doi.org/10.1111/j.1745-6606.2010.01160.x.

Brief Description: The study extended the psychological concept of implementation intentions to the analysis of savings behavior. A field experiment was conducted with current participants of an America Saves campaign in a large city in a U.S. Midwestern state. The intervention required the treatment group participants to write down specific plans about the upcoming month’s amount of savings deposit, the mode of deposit, the date of deposit, and the source of income for the deposit. In contrast to the rich implementation literature, those who were asked to make these action plans deposited less than the control group, who was asked to only indicate whether they intend to make a savings deposit in the next month.

Implications: The study documents the power of psychological nudges for savings behavior. Strict savings goals were shown to inhibit savings for a group of America Saves campaign participants. Several concepts that explain the unexpected finding, such as mental accounting and the “what-the-hell-effect” are discussed.

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This work is supported by the USDA National Institute of Food and Agriculture, New Technologies for Ag Extension project.