Temporal Reframing and Savings: A Field Experiment

Temporal Reframing and Savings: A Field Experiment

7 July, 2020    

A growing percentage of American workers are now freelancers and thus responsible for their own retirement savings, yet they face a number of psychological hurdles that hamper them from saving enough money for the long-term. Although prior theory-derived interventions have been successful in addressing some of these obstacles, encouraging participation in saving programs is a challenging endeavour for policymakers and consumers alike. In a field setting, we test whether framing savings in more or less granular formats (e.g., saving daily versus monthly) can encourage continued saving behavior through increasing the take-up of a recurring deposit program. Among thousands of new users of a financial technology app, we find that framing deposits in daily amounts as opposed to monthly amounts quadruples the number of consumers who enroll. Further, framing deposits in more granular terms reduced the participation gap between lower and higher income consumers: three times as many consumers in the highest rather than lowest income bracket participated in the program when it was framed as a $150 monthly deposit, but this difference in participation was eliminated when deposits were framed as $5 per day

Similar Articles
Examining the effect of expressing a quantitative goal on consumer savings
We examine the effectiveness of implementation intention plans for achieving regular savings with small-scale, exploratory field research. A series...
High Hopes: experimental evidence on saving and the transition to high school in Kenya
We report results of a randomised control trial in which parents of primary-school leavers were encouraged to open a convenient bank account operat...
Identification Strategy: A Field Experiment on Borrower Responses to Fingerprinting for Loan Enforcement
How do borrowers respond to improvements a lender’s ability to punish defaulters? We implemented a randomized field experiment in Malawi examinin...