The Effects of Time Frames on Personal Savings Estimates, Saving Behavior, and Financial Decision Making
35 Pages Posted: 9 Sep 2008
Date Written: August 1, 2008
We examine effects of time frame duration (a month vs. a year) and delay (next month vs. a specific month in the future) on personal savings estimates of individuals. Results reveal that savings estimates provided for a specific future month are significantly higher than those given for either next month or next year (Experiment 1). However, decision makers actually save much less (Experiment 2) and make riskier financial decisions (Experiment 3) after providing such estimates. An examination of the underlying process reveals that decision makers providing estimates for a specific future month frame the savings task more concretely and are more optimistic about being able to save in the future (Experiments 4 and 5), when compared to the other groups. These findings question the conventional practice of getting decision makers to estimate how much they will save for specific future time frames in advance. Theoretical and practical implications of this research are discussed.
Keywords: Savings, Duration, Delay, Time Frame, Optimism, Temporal Construal
Suggested Citation: Suggested Citation