Managing personal finances is challenging and complex. We all make a great many financial decisions every day, often without thinking...
Sep 28 2009
Committed to Savings: Using Behavioral Economics to Motivate Members
Behavioral economics is an emergent field of study that explains economics by taking into account the often fickle nature of human behavior. As a credit union executive, you can probably attest to the presence of irrational behavior in your interactions with all sorts of financial consumers. In Filene’s latest online only publication, “Committed to Savings: Using Behavioral Economics to Motivate Members”, Yale Professor Dean Karlan explains how this field of study could be used to motivate members.
In 2008, Filene’s i3 group piloted a product idea entitled Online Goal Setting, which was inspired by behavioral economic theory. A small group of credit unions beta-tested this concept with help from an organization called stickK.com. The brainchild of this report’s author, stickK.com is the application of a truly innovative idea called “commitment devices” or “commitment contracts.” Commitment contracts essentially allow people to take a contract out on themselves to spur some sort of positive activity: to stop smoking, lose weight, or save more money.
Report Number 194