By Susan Greenberg for Stanford GSB News
Americans have never been particularly good at saving money. In 2013, for example, the Organization for Economic Cooperation and Development found that Americans saved on average only 4.5% of their household income, while Europeans saved nearly 8% and Australians more than 11%. But according to a new study by Stanford Graduate School of Business researchers, there’s a way to change that: simply make people feel more powerful.
“When it comes to managing finances, it’s easy for people to feel overwhelmed and out of control,” says PhD student Emily Garbinsky. “How to help consumers regain control and make better decisions with their money is the focus of my work.” To do so, she relies on the strong relationship between money and power, investigating how feelings of power critically influence financial decision-making. She demonstrates, in collaboration with Stanford GSB professorJennifer Aaker and Anne-Kathrin Klesse of Tilburg University in the Netherlands, that making consumers feel more powerful increases their motivation to save.