Invites you to a

Experimental economics seminar presented by

(Daniel Campbell)

(Commonwealth Bank of Australia)

Making Saving Salient at Tax Time

Co-author:
Maroš Servátka (Macquarie University)

Tuesday 7 March 2023

12.00pm – 1.00pm

Abstract:

We conduct a field experiment at the Commonwealth Bank of Australia on 49,981 customers and answer the question of whether a salient savings reminder increases the savings rate of windfalls. In this randomised control trial, we send our nudge soon after a person receives their tax refund. One of our treatments is a generic savings nudge, while the other explicitly states the size of the refund to leverage an anchoring effect. Our  research adds to the literature by testing this anchoring effect in the context of personal finances, and through identifying heterogenous sub-groups for whom the nudge is more effective, by measuring liquid wealth and the relative size of the tax refund. Both the generic and anchoring nudge helped customers save $123 and $122, respectively, 14 days afters after the refund. At scale this would grow balances by $360m. We demonstrate that the anchoring nudge is leveraging an anchoring effect, which helps people with larger refunds to save more, but also has the spillover effect of prompting people to spend more. On the other hand, we find that the generic nudge helps people with smaller refunds to save more, and begets holistic change through a mental accounting mechanism and wealth effect.

For further information contact: Experimental economics seminar series coordinator
Dr Jonathan Levy (jonathan.levy@sydney.edu.au)

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