Analysing and Nudging Saving Behaviour

(Under)saving and (over)spending are increasingly becoming bigger problems on an individual, economical and governmental level. Individual debt, economic regression and increased governmental spending are direct results of individuals making the decision to consume now, instead of saving money. Individual's preference for direct rewards to delayed rewards have been long established in the psychology of intertemporal choice. With this research, we wish to see whether we can teach individuals to inhibit this response and move their preference to a delayed reward.

Literature Review
Every psychologist knows the famous "marshmallow" experiment, where kids will get two marshmallows if they refrain from eating just the one in front of them. This simple experiment shows lack of self-restraint and impatience, even when the reward of waiting is clear. Research in delayed gratification has had great impact in health science, mainly to dieting (Blumenthal-Barby, & Burroughs, 2012; Leonard, 2008). People who are asked to keep track of what and how much they eat, seem to be able to change their eating habits more successfully than those who do not (Blumenthal-Barby, & Burroughs, 2012).
Studies have found, however, that without a clear goal, behavioural change is hard (Leonard, 2008; Loewenstein, 1988). In real life, when it comes to consumption, it is unclear what an individual might end up with. This ambiguity, due to inflation, market crashes and any other phenomena that could make money worth less in the future, makes it more attractive to spend now (Fox & Weber, 2002; Maccheroni, Marinacci, & Rustichini, 2006). This present bias shows up most experiments, and can be mathematically explained using quasi-hyperbolic discounting. In quasi-hyperbolic discounting, the value of money that we would receive in the future is weighed against two parameters (beta, delta), that determine how strongly we prefer having the money now (Benhabib, Bisin & Schotter, 2010). This formula is usually obtained through analysing the responses to an intertemporal choice tasks (Benhabib, Bisin, & Schotter, 2010). These tasks ask participants for example, whether they would prefer 20 pounds now, or 25 in a week (see appendix).
Overall, it seems that awareness, continued tracking and goal simulation seem to increase the ability to exercise restraint and create a preference for delayed gratification, and consequently should decrease the values of the parameters in the discounting function. This experiment will test whether the methodology used works for nudging saving behaviour as well.