How goal-specific reminders increased savings by 16%

In this article, the authors propose two types of spending periods: regular consumption and lumpy expenditure. What, you ask, is a lumpy expenditure? It’s an expensive transaction typically not done too many times in a given year, such as school fees or front row seats to a basketball game. While we can assume there is minimal hyperbolic discounting with regular consumption, it’s lumpy expenditures that people are likely not saving for properly since they occur infrequently. The researchers wanted to demonstrate how reminders influence saving behavior, differing from other studies focused on strategies like nonbinding agreements or surveys. Participants in this study were working poor and middle-class clients of three banks in the Philippines, Peru, and Bolivia. Findings revealed that individuals saved 6% more when they received monthly reminders than those who did not; moreover, reminders that mentioned one’s specific savings goals raised savings rates by 16% compared to the standard reminder.