Text Yourself and Save More Money

We interviewed Jonathan Zinman, an associate professor of economics at Dartmouth College.

You've found an upside to an often annoying obsession. Describe your research on cell-phone texting.

We worked with several banks in different countries to give some of their clients text-message reminders to make savings deposits. These customers had signed up for savings accounts tied to goalsm — a commitment to make deposits around certain times, for example. We wanted to see whether text-message reminders increased the likelihood that customers would make those deposits and ultimately reach their savings goal.

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What did you find?

The reminders were effective. Customers who got them ended up saving 6% more in their accounts, compared with a control group who weren't reminded. Also, these customers were 3% more likely to meet their savings goal. These effects aren't enormous, but what's exciting is that this wasn't an enormous effort. Prompting people to do what they'd set out to do is inexpensive.

Did the wording of the message make a difference?

One thing we found is that mentioning the goal is way more effective than omitting it. If someone is planning to save for Christmas expenses, then sending a message that mentions Christmas is very effective.

Will it work for long-term goals, such as retirement?

Everything we did involved a short- or medium-term goal, with a horizon of roughly one year. We haven't done anything on retirement yet, but we'd like to.

Were certain people more responsive than others?

Some people have what social scientists think of as self-control problems that can depress savings. They know they have to save more, but something always leads them to procrastinate. The reminders worked much better on those people. The good news is that our results suggest that what we often think of as a deep and complicated self-control issue may be a simpler problem of lack of attention. Researchers may have misdiagnosed the cause of undersaving.

How can folks benefit from your research?

This is why we have PDAs and smart phones, right? Set a reminder. Also, many banks send messages or e-mails to report a low balance.