Earmarking and Partitioning: Increasing Saving by Low-Income Households

Journal of Marketing Research, Forthcoming

29 Pages Posted: 31 Dec 2010

See all articles by Dilip Soman

Dilip Soman

University of Toronto - Department of Marketing

Amar Cheema

University of Virginia (UVA), McIntire School of Commerce

Date Written: December 30, 2010

Abstract

This research examines the effects of earmarking money on savings by low-income consumers. In particular, the authors test two interventions that are designed to enhance the effects of earmarking: a) using a visual reminder of the savings goal and b) dividing the earmarked money into two parts. Consistent with prior research which suggests that partitioning increases self-control, individuals save more when earmarked money is partitioned into two accounts versus pooled in one account. In addition, the presence of the visual reminder increases the savings rate. The authors conclude with implications for consumers’ welfare and a discussion of directions for further research.

Keywords: saving, self-control, guilt, budgeting

JEL Classification: D12, D91, E21, M31, O16

Suggested Citation

Soman, Dilip and Cheema, Amar, Earmarking and Partitioning: Increasing Saving by Low-Income Households (December 30, 2010). Journal of Marketing Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1732709

Dilip Soman

University of Toronto - Department of Marketing ( email )

Amar Cheema (Contact Author)

University of Virginia (UVA), McIntire School of Commerce ( email )

125 Ruppel Drive
Charlottesville, VA 22903
United States
434-924-4350 (Phone)

HOME PAGE: http://www.commerce.virginia.edu/faculty/cheema

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