Earmarking and Partitioning: Increasing Saving by Low-Income Households

This research examines the effects of earmarking money on savings by low-income consumers. In particular, the authors test two interventions that are designed to enhance the effects of earmarking: (1) using a visual reminder of the savings goal and (2) dividing the earmarked money into two parts. Co...

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Bibliographic Details
Published in:Journal of marketing research 2011-01, Vol.48 (SPL), p.S14-S22
Main Authors: SOMAN, DILIP, CHEEMA, AMAR
Format: Article
Language:English
Subjects:
Bank accounts
Children
Consumer behavior
Consumer psychology
Consumer research
Consumer spending
Earmarks
Guilt
Low income groups
Savings
Self control
Social work
Studies
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Summary:This research examines the effects of earmarking money on savings by low-income consumers. In particular, the authors test two interventions that are designed to enhance the effects of earmarking: (1) using a visual reminder of the savings goal and (2) dividing the earmarked money into two parts. Consistent with prior research suggesting that partitioning increases self-control, people save more when earmarked money is partitioned into two accounts than when it is pooled into one account. In addition, the presence of the visual reminder increases the savings rate. The authors conclude with implications for consumer welfare and directions for further research.
ISSN:0022-2437
1547-7193
DOI:10.1509/jmkr.48.spl.s14