Temporal Reframing of Recurring Savings Reduces Perceived Pain and Helps Those with Lower Financial Literacy to Save

43 Pages Posted: 28 Sep 2021

See all articles by Stephen Shu

Stephen Shu

City, University of London

Steve Thomas

City University London - Sir John Cass Business School

David A. Smith

City, University of London - Bayes Business School

Date Written: September 14, 2021

Abstract

While assessments of the Gig Economy vary in terms of size, growth, and heterogeneity, most studies suggest that this segment of the economy is sizeable, growing, and diverse in terms of types of work. Some concerns in the literature include both the present and future welfare of workers in the Gig Economy. More granular, temporal reframing of savings (e.g., save $5 a day versus $150 a month) has been shown to improve participation in recurring savings programs, which can be an important tool for Gig Economy workers since they often face do-it-yourself financial savings. This paper extends prior work on temporal reframing to examine in a lab setting the psychology of temporal reframing and non-retirement savings decisions of workers. Key findings include a replication of main effects relative to daily framing increasing savings intentions. Additionally, evidence of reduced psychological pain as evidenced by both subjective feelings and objective thoughts (e.g., through a memory recall task consistent with Query Theory) about affordability is demonstrated. Evidence for granular framing helping those with lower financial literacy is also provided whereas subjective numeracy does not appear to moderate outcomes.

Keywords: choice architecture, behavioral economics, saving, financial decisions

Suggested Citation

Shu, Stephen and Thomas, Stephen H. and Smith, David A., Temporal Reframing of Recurring Savings Reduces Perceived Pain and Helps Those with Lower Financial Literacy to Save (September 14, 2021). Available at SSRN: https://ssrn.com/abstract=3923852 or http://dx.doi.org/10.2139/ssrn.3923852

Stephen Shu (Contact Author)

City, University of London ( email )

Northampton Square
London, EC1V 0HB
United Kingdom

Stephen H. Thomas

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44 (0) 20 7040 5271 (Phone)
+44 (0) 20 7040 8881 (Fax)

David A. Smith

City, University of London - Bayes Business School ( email )

United Kingdom

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