If You Knew You Had Less in Savings Than Your Neighbors, Would You Start Saving More?

Researchers in the Netherlands wanted to find out whether people with a low savings amount would start saving more if they knew they saved less than others in their neighborhood.

Providing such info is referred to as a social norm nudge. Such nudges signal appropriate behavior and are classed as behavioral expectations or rules within a group of people.

My first thought when I started reading the study was my monthly utility bill, which provides a comparison of my utility usage compared to the average utility usage in our neighborhood and the lowest utility usage in the neighborhood. I think in the two-plus years, we have never been below the average. I’m not questioning the data, but it was interesting when several neighbors got together and someone mentioned their utility bill, and it turned out that no one in the group was below the average. I guess that means I need to find more environmentally-friendly neighbors and become one myself.

Anyway, back to the savings study.

The researchers worked with a Dutch Bank (ING Netherlands) to compare the savings amounts of over 15,000 clients. The social norm nudge was targeted to households whose savings amount was less than that of the median household in their neighborhood. Through email communications, sent by ING Netherlands, the clients received an email stating “You have a lower savings amount with us than most other ING clients in your neighborhood.” The intent of the email was to encourage clients to change their savings behavior and save more.

The results of the study found that those who received the email with the social norm nudge were more likely to click on (or click more often on) a link to their personal page where they could start or adjust an automatic savings plan.

However, while the nudge drove a strong intent to save, the study also found this social norm nudge to have neither a short-term or long-term effect on actual savings. Likewise, the researchers didn’t find any significant difference between the clients that received the nudge and those that didn’t on their frequency of automatic savings transactions.

The results of this study were somewhat surprising, as there has been a large body of existing evidence that found social norm nudging to change people’s behavior. The researchers concluded that while the social norm nudge experiment did strengthen people’s intentions to save, these intentions are not always followed up by a substantive change in behavior.

I must admit I feel the same kind of way about our monthly utility bill. Every month when I open up the envelope, the first thing I look at is how we did compared to our neighbors. As I said, we are always above the average. So I immediately promise to myself to be more diligent.

But then an hour later, I’m turning up the thermostat because it dipped below 72 degrees in the house.

So perhaps I need more of a nudge than just a chart; perhaps some tangible reward from the utility company for any household that is below the average for six straight months.

But I also think when it came to a savings nudge, I think I would try more aggressively not to be below the average. In other words, these emails from the bank would likely cause me to modify my behavior.

Perhaps because that has a very tangible reward, you can see your savings account grow.

With the utility bill, you may not notice any immediate tangible benefit if you were using fewer utilities than your neighbors. It may take a while to realize any cost savings from such behavior. That is why attaching a tangible reward to the desired behavior may encourage the desired change.

Maybe the banks and utility companies should get together- any savings from lowered utility usage would go directly into your saving account.


44 thoughts on “If You Knew You Had Less in Savings Than Your Neighbors, Would You Start Saving More?

  1. Well 72 is cold! LOL! 74 is better! We get the notice about how we rate compared to our neighbors and can’t say it entices us to change.
    Can’t say thr savings thing would either. Now if they were giving bonuses out for saving a certain amount that would be a bigger incentive.

    Liked by 3 people

  2. This seems to me like another sad case of you obsessively checking your stats. Except that these stats are in your utility bill.

    But I think this is government forcing your utility company to guilt you into using less utilities. Which is actually bad for their business, as they’re trying to encourage you to buy less of their product. So instead of feeling guilty for being above average, consider feeling proud over how well you’re supporting your local utility company.

    Liked by 2 people

    1. it’s all about the stats, and the benjamins.

      you wonder why the utility companies would want you to consume less of their product. does not seem rational. they must be up to something…

      Liked by 1 person

  3. I couldn’t care less if my savings are not on par with my neighbours. I only save what I can afford. We were rewarded with honourable mentions during our drought if we used less water than allowed. That was an easy goal to achieve for us with careful planning.

    Liked by 2 people

    1. I agree, savings should be a personal choice. But I do think it is helpful t have s ense of how you are doing compared to the average. If I am saving one percent of my paycheck and the average is 5%, that may be a sign I should try to save more. Did the honorable mention come with any other reward?

      Liked by 1 person

  4. If my bank said I was saving less than my neighbors, I’d say duh, I have less income than them too. 😄 Anyway with interest rates so absurdly low, I think there are much better options than savings accounts. Using less energy comes with the reward of paying a lower bill.

    Liked by 2 people

    1. good point about savings accounts not being the best place to save your money these days. and I wonder how much you can save on your utility bill if you lower your usage; perhaps the savings aren’t worth the effort…


  5. I’m rarely, if ever, influenced by my neighbors. I think my wife and I are probably a bit more on the conservative side when it comes to spending. We all have to do what works for us. I may see a neighbor driving a fancy new sports car, but that wouldn’t affect me in the slightest. We were able to retire sooner than most because of our self-discipline and good habits. Two years ago, we spent more in a year than ever before, but this year, there are fewer opportunities to spend money because we don’t go anywhere because of the virus.

    Liked by 1 person

    1. congrats on your savings discipline, you are reaping the rewards now. since you did not spend as much this year, think how much you can spend once the virus is under control… 🙂

      Liked by 1 person

  6. What you call a societal norm nudge, we used to call “keeping up with the Joneses”. It is the same principle that makes us notice the neighbor’s new car, or their much nicer and greener lawn, or newer set of golf clubs, or their huge WP stats, etc. I think this only works when the benefit of the touted behavior aligns with our already very determined goals for our own lives. It taps into our innate competitive nature, but we rarely compete unless we already have determined some value or benefit in winning. And interesting post as always, Q! Making me put mu thinking cap on very early today. Now where is that last electric bill?

    Liked by 2 people

    1. I don’t care about what specific neighbors do, but I think it is helpful to just be aware of broad averages, like how much of your income goes towards housing, or food, or savings. If you are way out of line in a certain area, it may help you to figure out if it is worth trying to change. And I guess that’s the holy grail, figuring what nudge works best for each individual…

      Liked by 1 person

  7. I wonder about someone who already worries about keeping up with the joneses, pushing themselves even harder, or if any feel shame that they can’t keep up?

    Liked by 1 person

  8. If my bank mailed to tell me that my savings were lower than others in my area:

    1. I wouldn’t be in the least surprised, as it’s a fairly wealthy place,
    2. I’d do nothing, as I don’t have disposable income to save at their behest, with the pitifully low interest rates they are offering, and
    3. I’d send them a two word reply, the second word being ‘off.’

    As marketing tricks go, that one is pretty shabby.

    Liked by 1 person

  9. I am very aware of the impact of my utility has on the environment so I am sparing with everything, but my guests are never cold. We don’t get told our neighbourhood average. I once had an account with Ing bank. Telling people they save less money than others is great psychology.

    Liked by 1 person

    1. I don’t like the cold, so I tend to keep our house a bit warmer than average. And I would be curious how my savings compare to some average, whether it’s by neighborhood, state, or country…

      Liked by 1 person

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