A social nudge towards saving more?

In the Netherlands, about one in three households has a lower financial buffer than is recommended, according to the Dutch non-profit organisation Nibud. Banks and other institutions want this to change and, for several years, have been testing options to get their customers to set aside more money. But simply providing information about the benefits of saving more has had little impact.

Enter, the social norm nudge.

A nudge is like a push in the right direction, which slightly alters the environment without reducing freedom of choice. The social norm nudge, which has proven to be particularly fruitful, specifically points out how people differ from the rest of the pack.

Research has shown that social norms strongly influence human behaviour.

For example, a classical social psychological experiment found that hotel guests were more likely to re-use their towels when told that the vast majority of guests did this as well. Similarly, taxpayers were more likely to pay their taxes on time when told that 90% of taxpayers paid promptly.

Households seem to benefit from nudges, too; they save more energy when they know their energy consumption is substantially higher than their neighbours’.

Such ‘social norm messages’, describing how other people behave, are much more effective than ‘injunctive norm messages’, describing what people should be doing.

As for saving, there’s only been a single experiment involving social norm messages, by Beshears et al. In a field experiment, the researchers tested whether employees of an industrial company could be nudged into larding their pension, by learning how much their co-workers were saving. The answer was negative. Most employees ignored the nudge, and some actually responded by saving even less. The researchers suspected that this was simply due to an unhappy choice of the comparison group: employees within the same age category got the same message, regardless of their income. Co-workers with relatively low income gave into a stubborn impulse to save even less than they did before they received the message in which they were compared to colleagues with a higher salary.

We thought the whole idea of social norm nudging deserved a second chance. To find out how a nudge could help people save more, we redesigned Beshears’ version, making sure that the nudge message compared the saver in question to a similar group of savers.

We focused on various neighbourhoods in the Netherlands, inhabited by the same kind of people: ING customers who resembled one another in terms of age as well as income. We sent out a social norm email message that talked about other people living in the same area: "You have a significantly smaller financial buffer than most other ING customers in your area.”

We were interested in ING customers with a bank balance that was not negative but still significantly lower than the median in their area. These customers got an email with our social norm message, accompanied by a short post about automatic saving. The post included a link to a landing page, where customers were gently guided towards increasing their financial buffer.

Our control group consisted of ING customers with similar features and living in almost identical areas. They got the same email – but without the social norm message. We deliberately excluded ING customers who saved more than the median in their area as the message could have had a negative impact on them if they realised they were actually saving more than the norm.

We found that the households who received the social norm nudge visited the online landing page 26% more often (3.4% in the intervention group versus 2.7% in the control group). That sounds promising and seems as though the social norm message did get people to think about saving more. But did they act on it?

Unfortunately, they didn't. Three months after the email, their buffer hadn’t changed even a little bit. While the social norm nudge sparked some attention initially and helped people find their way onto the landing page, the message failed to produce the result we were hoping for. Saving behaviour, it seems, is hard to change.