Temporal Reframing of Recurring Savings Reduces Perceived Pain and Helps Those with Lower Financial Literacy to Save
43 Pages Posted: 28 Sep 2021
Date Written: September 14, 2021
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
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