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Accounting for the role of habit in regular saving

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  • Loibl, Cäzilia
  • Kraybill, David S.
  • DeMay, Sara Wackler
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    Abstract

    The present study combines insights from social psychology and economics by examining the role of savings habits in regular saving. As frequently practiced, automatic, and goal-facilitated behaviors, savings habits play a critical role in everyday financial decisions. Using the Self-Report Habit Index developed by Verplanken and Orbell (2003), we collected and analyzed survey data to (1) validate the role of habit in regular saving; (2) test whether participation in a savings program, the Individual Development Account program, facilitates habit formation; and (3) examine the role of habit in individual's perception of financial strain. The results showed that habit mattered for regular saving. It influenced savings amounts above and beyond Theory of Planned Behavior and deposit frequency measures. Habit strength increased over time during program participation and savings habits reduced the stress of financially difficult situations.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0167487011000626
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Psychology.

    Volume (Year): 32 (2011)
    Issue (Month): 4 (August)
    Pages: 581-592

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    Handle: RePEc:eee:joepsy:v:32:y:2011:i:4:p:581-592

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    Web page: http://www.elsevier.com/locate/joep

    Related research

    Keywords: Habit Decision making Consumer behavior Saving;

    References

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    Cited by:
    1. Corradi, Nicola & Priftis, Konstantinos & Jacucci, Giulio & Gamberini, Luciano, 2013. "Oops, I forgot the light on! The cognitive mechanisms supporting the execution of energy saving behaviors," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 88-96.

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