Temporal Reframing Elicitations Can Improve the Emergency Savings Intentions of Gig Workers

Abstract

Gig Economy workers often face do-it-yourself financial savings, more granular earnings structures (versus being salaried employees), and proportionally greater financial uncertainty whether psychologically perceived or real (e.g., income uncertainty). This paper extends prior work on temporal reframing (e.g., which has used specific amounts, such as saving a set amount per day) to explore in a lab setting with UK-based participants whether eliciting emergency savings decisions in temporal frames may make a difference even without specific amounts (e.g., how much would you like to save per day in pounds) and relative to completely unstructured savings decisions (e.g., how much would you like to save). Given the emergency savings context, we further examine exogenously varying levels of income risk on intentions to participate in recurring savings into an emergency saving fund. The investigation provides evidence that eliciting savings using more granular temporal frames (e.g., how much would you save per day versus how much would you save per month) increases savings, but likely through different psychological mechanisms as compared to when savings choices are offered with specific amounts. Whereas prior literature has shown mixed evidence for the independent worker segment and precautionary savings, this investigation supports the perspective that under moderate income variability, independent workers will also increase their intentions for precautionary savings, although under high income variability these increases may start to reverse (e.g., inverted U-shaped outcome response to increasing income variability) after controlling for small stakes risk and loss aversion and other demographics.

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