Saving in Cycles: How to Get People to Save More Money
University of Wollongong - School of Management, Operations and Marketing
Utpal M. Dholakia
Rice University - Jesse H. Jones Graduate School of Business
August 4, 2013
Psychological Science, Forthcoming
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 using our proposed cyclical savings method provide an average of 74% higher savings estimates and save an average of 78% more money when compared to those using a linear savings method. We also find that the cyclical savings method is more efficacious as a result of greater implementation planning and lower future optimism regarding saving money.
Number of Pages in PDF File: 18
Keywords: Cyclical time orientation, personal savings, implementation plan, future optimism, financial decision making
Date posted: November 13, 2013
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