How Marketing Can Encourage Saving

Jun 16, 2017 8:05 AM ET

Marketing makes us want to buy all kinds of stuff. But can marketing magic make saving more appealing, fun, or even cool?

Virtually everyone would like to retire comfortably and to be free from financial worry on a daily basis. Yet, many people don’t save enough even for unexpected expenses—a proposition that’s even more challenging for low-to-medium income people. Look to a U.S. Federal Reserve Board survey published in May 2016, in which 46 percent of respondents said they couldn’t cover even a $400 emergency expense without selling something or borrowing money.

Behavioral economics argues that we are imperfect beings in an imperfect world. We are swayed by biases, we lack key information or—perhaps most likely—we don’t act at all.

“Tomorrow, we are wonderful people,” says Kristen Berman of Common Cents Lab, a behavioral lab at Duke University. “But today, we may eat the muffin, we may spend a little bit more, we may watch a movie when we should otherwise be working.”

Our behavior may be present-biased, Berman says, but it can also be influenced. The key lies in shaping the environmental cues that inform why we make certain financial decisions. That can mean creating ways for people to save automatically or encouraging new bank customers to set financial goals. Increasingly, it also means behavioral science, rather than nagging, to entice people into healthy financial behavior.

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