To Know and To Care: How Tradeoff Salience and Connectedness to the Future Self Jointly Influence Fiscal Restraint
Coauthor(s): Oleg Urminsky, Shane Frederick.
We show that financial decision-making in the present is jointly affected by the motivation to provide for one's future self and awareness of long-term implications of one's choices. Feeling more connected to the future self—thinking that the important psychological properties that define your current self are preserved in the person you will be in the future—motivates consumers to make decisions that they recognize as more prudent and less myopic. We find that when opportunity costs are prompted: (i) connectedness and discount factors predict restrained spending (Studies 1a and 1b), (ii) measured (Study 2) and manipulated (Study 3) connectedness reduces purchasing, (iii) manipulated connectedness affects choices by changing the valuation of future outcomes (as measured by discount factors; Study 4), and (iv) increasing connectedness increases price sensitivity (Study 5). The valuation of future outcomes only affects financial decisions when people are either explicitly reminded of or spontaneously consider tradeoffs between their short-run and long-run interests. Implications for the efficacy of information-based behavioral interventions are discussed.
Source: Working Paper
Bartels, Daniel, Oleg Urminsky, and Shane Frederick. "To Know and To Care: How Tradeoff Salience and Connectedness to the Future Self Jointly Influence Fiscal Restraint." Working Paper, Columbia Business School, 2012.