Goal Bracketing in Saving Decisions

with M. G. Kocher and J. Nafziger

Using a controlled lab-in-the-field experiment conducted in schools, we investigate the impact of different goal reminders on saving decisions  of adolescents from a low socioeconomic background. We simulate a (precautionary) savings situation, where  participants receive a weekly income for three weeks from the researchers; an income shock hits their income  with a 50\% chance in the fourth week.  In the beginning, participants set weekly savings goals on how much they want to save in each week. We vary the type of reminders participants receive when making their saving decisions in the following weeks: in ``broad bracketing", we remind them of their aggregated savings goals; in ``narrow bracketing" we remind them of their weekly goals; in the control condition, we do not remind them at all. We find that broad bracketing compared to the control increases savings and the probability that participants reach their savings goals whereas we do not find that effect for narrow bracketing.

(Working Paper coming soon)