Researchers Develop Novel Method for Helping People Increase Personal Savings
New study shows people are not as financially responsible as they would like to believe
TORONTO – Monday, February 8, 2021 – Researchers from York University’s Schulich School of Business, the University of Notre Dame, and University of New England have published a new paper in the Journal of Marketing that examines why people under-save and provides a simple, short, and inexpensive intervention that helps them increase their personal savings.
The study, titled “Popping the Positive Illusion of Financial Responsibility Can Increase Personal Savings: Applications in Emerging and Western Markets”, argues that many people hold unrealistically positive beliefs about how well they save and manage money – beliefs that actually prevent them from saving more money. One solution, developed by the team of researchers, is an “intervention” that shatters, or “pops”, the positive illusion that these people cling to.
The researchers created something they termed a “superfluous-spender intervention” that influenced people to believe they were not saving as well as they believed. Across a series of six experiments, they showed that people receiving the superfluous-spender intervention increased both their intentions to save and increased their actual savings relative to those who do not receive the intervention. According to the researchers, “the intervention increases saving by inducing one’s desire to restore diminished perceptions of financial responsibility.”
The research paper is authored by Nicole Mead, Associate Professor of Marketing at Schulich; Emily Garbinsky, Assistant Professor of Marketing at the University of Notre Dame’s Mendoza College of Business; and Daniel Gregg, a Senior Research Fellow at the University of New England in Australia.
“This research has the potential to improve people’s lives in these challenging times,” says Schulich’s Nicole Mead. “My co-authors and I have developed a simple, inexpensive, and easy-to-implement intervention that can help people to save more money.”
Adds Mead: “Before the pandemic hit, many countries were reporting record low saving rates and record high debt loads. The pandemic made clear to both households and governments the importance of having an emergency savings fund. Hopefully, expediting saving will continue to be a prominent conversation in the lives of people around the world.”
Professor Nicole Mead is available for interviews about the findings.