IDEAS home Printed from https://ideas.repec.org/a/bla/jconsa/v52y2018i3p733-745.html
   My bibliography  Save this article

Soft versus Hard Commitments: A Test on Savings Behaviors

Author

Listed:
  • Jeremy Burke
  • Jill Luoto
  • Francisco Perez‐Arce

Abstract

Commitment devices restricting future behavior have demonstrated promise in helping individuals improve their savings behavior, yet often suffer from low take‐up. We test a new “soft” commitment account that asks borrowers to think about their savings goals, how it would feel to achieve them, and make a pledge to work toward these goals, yet has no external restrictions on savings behavior. In a six‐month randomized experiment among consumers that find it difficult to meet their savings needs, we find that such soft commitments can significantly increase initial savings relative to either a hard commitment account (that prevents withdrawals) or a traditional savings account. In addition, the soft commitments significantly increased final savings balances relative to no form of commitment and were particularly effective for impatient individuals. Despite the lower initial take‐up, the hard commitment account proved most effective in building savings balances among our participants at the end of 6 months.

Suggested Citation

  • Jeremy Burke & Jill Luoto & Francisco Perez‐Arce, 2018. "Soft versus Hard Commitments: A Test on Savings Behaviors," Journal of Consumer Affairs, Wiley Blackwell, vol. 52(3), pages 733-745, November.
    • Handle: RePEc:bla:jconsa:v:52:y:2018:i:3:p:733-745
    DOI: 10.1111/joca.12170
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/joca.12170
    Download Restriction: no
    File URL: https://libkey.io/10.1111/joca.12170?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Musah, Alhassan & Yakubu, Ibrahim Nandom & Abagna, Matthew Amalitinga, 2022. "Financial Literacy: A Peep into the Literature and Note for Policy," MPRA Paper 115703, University Library of Munich, Germany.
    2. Luca A. Panzone & Natasha Auch & Daniel John Zizzo, 2024. "Nudging the Food Basket Green: The Effects of Commitment and Badges on the Carbon Footprint of Food Shopping," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(1), pages 89-133, January.
    3. Paul Bettega & Paolo Crosetto & Dimitri Dubois & Rustam Romaniuc, 2023. "Hard vs. soft commitments: Experimental evidence from a sample of French gamblers," Working Papers 2023-05, Grenoble Applied Economics Laboratory (GAEL).
    4. Kyoung Tae Kim & Soo Hyun Cho & Sharon A. DeVaney, 2021. "Racial/ethnic differences in holding a retirement saving motive: A decomposition analysis," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 464-482, June.
    5. Derksen, Laura & Kerwin, Jason & Reynoso, Natalia Ordaz & Sterck, Olivier, 2024. "Healthcare Appointments as Commitment Devices," IZA Discussion Papers 17070, Institute of Labor Economics (IZA).
    6. Steinert, Janina Isabel & Vasumati Satish, Rucha & Stips, Felix & Vollmer, Sebastian, 2022. "Commitment or concealment? Impacts and use of a portable saving device: Evidence from a field experiment in urban India," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 367-398.
    7. Alexia Gaudeul & Caterina Giannetti, 2021. "Fostering the adoption of robo-advisors: A 3-weeks online stock-trading experiment," Discussion Papers 2021/275, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    8. Beshears, John & Choi, James J. & Harris, Christopher & Laibson, David & Madrian, Brigitte C. & Sakong, Jung, 2020. "Which early withdrawal penalty attracts the most deposits to a commitment savings account?," Journal of Public Economics, Elsevier, vol. 183(C).
    9. Timmons, Shane & Robertson, Deirdre & Lunn, Pete, 2022. "Combining nudges and boosts to increase precautionary saving: A large-scale field experiment," Papers WP722, Economic and Social Research Institute (ESRI).
    10. Alexia GAUDEUL & Caterina GIANNETTI, 2023. "Trade-offs in the design of financial algorithms," Discussion Papers 2023/288, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jconsa:v:52:y:2018:i:3:p:733-745. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-0078 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.