Saving in cycles: how to get people to save more money

Psychological Science
Leona Tam, Utpal Dholakia

Abstract

Low personal savings rates are an important social issue in the United States. We propose and test one particular method to get people to save more money that is based on the cyclical time orientation. In contrast to conventional, popular methods that encourage individuals to ignore past mistakes, focus on the future, and set goals to save money, our proposed method frames the savings task in cyclical terms, emphasizing the present. Across the studies, individuals who used our proposed cyclical savings method, compared with individuals who used a linear savings method, provided an average of 74% higher savings estimates and saved an average of 78% more money. We also found that the cyclical savings method was more efficacious because it increased implementation planning and lowered future optimism regarding saving money.

References

Jul 30, 2003·Psychological Review·Yaacov Trope, Nira Liberman
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Aug 14, 2008·Behavior Research Methods·Kristopher J Preacher, Andrew F Hayes
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Nov 23, 2011·Journal of Experimental Psychology. General·Christopher J Bryan, Hal E Hershfield
Nov 1, 2011·JMR, Journal of Marketing Research·Hal E HershfieldJeremy N Bailenson

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