A new study by a group of economists looking at why people save money found that sending out text reminders to participants’ cell phones increased savings balances by 6%. According to a Dow Jones news report, the study challenges the idea that people don’t have enough self-control to save.
Instead Dartmouth University economics professor Jonathan Zinman, one of the study’s four authors, said savings just isn’t at the top of people’s minds. “Basically all we did was remind them,” he said.
The study also found that while positive or negative language didn’t have a significant effect on the savings rate, mentioning a customer’s specific goal did. In addition, when reminders mentioned incentives offered by the bank for consistent deposits, bank savings increased by almost 16%, the news report said.
The economists conducted their study in three locations in the developing world, but said they are confident the results would translate to the U.S. In three cases conducted in the Philippines, Peru and Bolivia, the economists teamed up with local banks to send reminders to people randomly selected from those who had recently opened a savings account.
The banks sent several different types of messages, including letters in Peru and text messages in Bolivia and the Philippines. Some used negative language to stress the consequences of not saving money, such as “If you don’t frequently deposit into the Gihandom Savings account, your dream will not come true,” – a message used in the Philippines.