IDEAS home Printed from https://ideas.repec.org/a/ucp/jacres/doi10.1086-690462.html
   My bibliography  Save this article

A Penny Saved Is Not a Penny Earned: When Decisions to Earn and Save Compete for Consumer Resources

Author

Listed:
  • Eesha Sharma
  • Punam A. Keller

Abstract

Policy makers, practitioners, and researchers emphasize the importance of consumers developing capabilities to improve their financial well-being. Key principles concern the management of two integral resources: earnings and savings. Although prior research has examined factors influencing those resources independently, less is known about how earn-save decisions are made in conjunction: for example, how people allocate hours in a day to activities aimed at learning how to increase earnings or savings. Thus, we examine how people think about and decide between opportunities to earn and save. In addition, we study whether perceived financial deprivation interacts with preferences for earning and saving opportunities. Four experiments show that (1) people prefer options to earn over options to save, despite believing that increases in earnings may not increase savings, (2) perceived financial deprivation heightens preferences for earning over saving, and (3) reframing saving options as earning options enhances preferences for saving among the financially deprived.

Suggested Citation

  • Eesha Sharma & Punam A. Keller, 2017. "A Penny Saved Is Not a Penny Earned: When Decisions to Earn and Save Compete for Consumer Resources," Journal of the Association for Consumer Research, University of Chicago Press, vol. 2(1), pages 64-77.
    • Handle: RePEc:ucp:jacres:doi:10.1086/690462
    DOI: 10.1086/690462
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/690462
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/690462
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/690462?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Raghunathan, Rajagopal & Pham, Michel Tuan, 1999. "All Negative Moods Are Not Equal: Motivational Influences of Anxiety and Sadness on Decision Making, , , , ," Organizational Behavior and Human Decision Processes, Elsevier, vol. 79(1), pages 56-77, July.
    2. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2014. "Savings by and for the Poor: A Research Review and Agenda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 36-78, March.
    3. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
    4. Dolan, Paul & Peasgood, Tessa & White, Mathew, 2008. "Do we really know what makes us happy A review of the economic literature on the factors associated with subjective well-being," Journal of Economic Psychology, Elsevier, vol. 29(1), pages 94-122, February.
    5. Derek D. Rucker & Miao Hu & Adam D. Galinsky, 2014. "The Experience versus the Expectations of Power: A Recipe for Altering the Effects of Power on Behavior," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 41(2), pages 381-396.
    6. Spears Dean, 2011. "Economic Decision-Making in Poverty Depletes Behavioral Control," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-44, December.
    7. Leilei Gao & S. Christian Wheeler & Baba Shiv, 2009. "The "Shaken Self": Product Choices as a Means of Restoring Self-View Confidence," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 36(1), pages 29-38, June.
    8. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2014. "Savings by and for the Poor: A Research Review and Agenda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 36-78, March.
    9. Derek D. Rucker & Adam D. Galinsky, 2008. "Desire to Acquire: Powerlessness and Compensatory Consumption," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 35(2), pages 257-267, April.
    10. Eesha Sharma & Adam L. Alter, 2012. "Financial Deprivation Prompts Consumers to Seek Scarce Goods," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 39(3), pages 545-560.
    11. Sharma, Eesha & Mazar, Nina & Alter, Adam L. & Ariely, Dan, 2014. "Financial deprivation selectively shifts moral standards and compromises moral decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 123(2), pages 90-100.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Bastos, Wilson, 2020. "“Speaking of Purchases”: How Conversational Potential Determines Consumers' Willingness to Exert Effort for Experiential Versus Material Purchases," Journal of Interactive Marketing, Elsevier, vol. 50(C), pages 1-16.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carvalho, Leandro S. & Prina, Silvia & Sydnor, Justin, 2016. "The effect of saving on risk attitudes and intertemporal choices," Journal of Development Economics, Elsevier, vol. 120(C), pages 41-52.
    2. Sunyee Yoon & Hyeongmin Christian Kim & Vicki MorwitzEditor & Simona BottiAssociate Editor, 2018. "Feeling Economically Stuck: The Effect of Perceived Economic Mobility and Socioeconomic Status on Variety Seeking," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 44(5), pages 1141-1156.
    3. Callen, Michael & Blumenstock, Joshua & Ghani, Tarek, 2016. "Mobile-izing Savings with Automatic Contributions: Experimental Evidence on Present Bias and Default Effects in Afghanistan," CEPR Discussion Papers 11400, C.E.P.R. Discussion Papers.
    4. Vincent Somville & Lore Vandewalle, 2018. "Saving by Default: Evidence from a Field Experiment in Rural India," American Economic Journal: Applied Economics, American Economic Association, vol. 10(3), pages 39-66, July.
    5. Chen, Hailiang & Hwang, Byoung-Hyoun, 2022. "Listening in on investors’ thoughts and conversations," Journal of Financial Economics, Elsevier, vol. 145(2), pages 426-444.
    6. Ying Ding & Yanping Tu & Jingchuan Pu & Liangfei Qiu, 2021. "Environmental Factors in Operations Management: The Impact of Air Quality on Product Demand," Production and Operations Management, Production and Operations Management Society, vol. 30(9), pages 2910-2924, September.
    7. Claire Duquennois, 2022. "Fictional Money, Real Costs: Impacts of Financial Salience on Disadvantaged Students," American Economic Review, American Economic Association, vol. 112(3), pages 798-826, March.
    8. Antonia Grohmann & Tabea Lakemann & Helke Seitz, 2020. "Savings Goal Calendars as Soft Commitment Devices: Evidence from Small Business Owners in Uganda," Discussion Papers of DIW Berlin 1919, DIW Berlin, German Institute for Economic Research.
    9. Geng, Xin & Janssens, Wendy & Kramer, Berber, 2018. "Liquid milk: Cash Constraints and Recurring Savings among Dairy Farmers in Kenya," 2018 Annual Meeting, August 5-7, Washington, D.C. 273823, Agricultural and Applied Economics Association.
    10. Prina, Silvia, 2015. "Banking the poor via savings accounts: Evidence from a field experiment," Journal of Development Economics, Elsevier, vol. 115(C), pages 16-31.
    11. Chadwick J. Miller & Daniel C. Brannon & Jim Salas & Martha Troncoza, 2021. "Advertising, incentives, and the upsell: how advertising differentially moderates customer- vs. retailer-directed price incentives’ impact on consumers’ preferences for premium products," Journal of the Academy of Marketing Science, Springer, vol. 49(6), pages 1043-1064, November.
    12. DeMarree, Kenneth G. & Briñol, Pablo & Petty, Richard E., 2014. "The effects of power on prosocial outcomes: A self-validation analysis," Journal of Economic Psychology, Elsevier, vol. 41(C), pages 20-30.
    13. Renata Baborska & Emilio Hernandez & Emiliano Magrini & Cristian Morales-Opazo, 2020. "The impact of financial inclusion on rural food security experience: A perspective from low-and middle-income countries," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 10(2), pages 1-18.
    14. Di Giannatale, Sonia & Roa, María José, 2016. "Formal Saving in Developing Economies: Barriers, Interventions, and Effects," IDB Publications (Working Papers) 8107, Inter-American Development Bank.
    15. Knar Khachatryan & Vardan Baghdasaryan & Valentina Hartarska, 2018. "Is the model loans-plus-savings better for microfinance in ECA? A PSM comparison," Working Paper c5a69366-4231-479c-879d-c, European Microfinance Network.
    16. Grohmann, Antonia & Klühs, Theres & Menkhoff, Lukas, 2018. "Does financial literacy improve financial inclusion? Cross country evidence," World Development, Elsevier, vol. 111(C), pages 84-96.
    17. Leandro De Magalhães & Dongya Koh & Raül Santaeulàlia-Llopis, 2016. "Consumption and Expenditure in Sub-Saharan Africa," Bristol Economics Discussion Papers 16/677, School of Economics, University of Bristol, UK, revised 07 Oct 2016.
    18. María José Roa García & Diana Mejía (ed.), 2018. "Decisiones financieras de los hogares e inclusión financiera: evidencia para América Latina y el Caribe," Investigación Conjunta-Joint Research, Centro de Estudios Monetarios Latinoamericanos, CEMLA, edition 1, volume 1, number 7sp, December.
    19. Mirpourian, Mehrdad, 2020. "A Gendered Look at Savings Behavior among Nigerian Microsavers," MPRA Paper 103062, University Library of Munich, Germany.
    20. Nadine Muller & Shannon A McMahon & Jan-Walter De Neve & Alexej Funke & Till Bärnighausen & Elsa N Rajemison & Etienne Lacroze & Julius V Emmrich & Samuel Knauss, 2020. "Facilitators and barriers to the implementation of a Mobile Health Wallet for pregnancy-related health care: A qualitative study of stakeholders’ perceptions in Madagascar," PLOS ONE, Public Library of Science, vol. 15(1), pages 1-15, January.

    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:ucp:jacres:doi:10.1086/690462. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JACR .

    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.