Goal Setting and Saving in the FinTech Era

Abstract

We study the effectiveness of saving goals in increasing individuals’ savings using data from a Fin-
Tech App. We establish that setting goals increases individuals’ savings rate and show that the effect is causal using a difference-in-differences identification strategy that exploits the random assignment of users into a group of beta testers who can set goals and a group of users who cannot. The increased savings within the App do not come at the expense of reduced savings outside the App. Moreover, goal setting also helps the individuals the literature has identified to have the lowest propensity to save. We explore the economic channels of our results by matching App user survey responses to their behavior and highlight the relative merits of monitoring and concreteness channels in explaining our findings.

Keywords: Goal Setting, Financial Technology, Saving Behavior

JEL Classification: D14, G41, G51