The Effects of Time Frames on Personal Savings Estimates, Saving Behavior, and Financial Decision Making

35 Pages Posted: 9 Sep 2008

See all articles by Leona Tam

Leona Tam

University of Wollongong - School of Management, Operations and Marketing

Utpal M. Dholakia

Rice University - Jesse H. Jones Graduate School of Business

Date Written: August 1, 2008

Abstract

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

Tam, Leona and Dholakia, Utpal M., The Effects of Time Frames on Personal Savings Estimates, Saving Behavior, and Financial Decision Making (August 1, 2008). Available at SSRN: https://ssrn.com/abstract=1265095 or http://dx.doi.org/10.2139/ssrn.1265095

Leona Tam

University of Wollongong - School of Management, Operations and Marketing ( email )

Building 40
Northfields Avenue
Wollongong, 2522
Australia

Utpal M. Dholakia (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
142
Abstract Views
747
rank
204,401
PlumX Metrics