Borrowing your way to savings
It may sound strange but borrowing can be an effective way of saving, an article in the New York Times says. A promise to save £100 a month may quickly be broken but having to repay £100 a month is a powerful motivator. In the article, New York University economist Jonathan Morduch told the story of Khadeja, a woman from Bangladesh who borrowed money at 36% interest to invest in gold jewellery. She knew she would most likely never be able to save enough to get it, but she would be sure to make her payments to the lender.
Interview with nudging chief
Successes of and challenges faced by the UK’s Behavioural Insights Team are detailed in an interview with its head David Halpern with website The Psych Report. Halpern says the “Nudge Unit”, as it is known, had even managed to reduce public complaints to the tax office – as well as delivering “hundreds of millions of revenue”.
No such thing as a freebie?
What happens when you get something for nothing? On one level a company that hands out free products to potential consumers may be rewarded with gaining some lifelong customers blogs Martha C. White for Time online. On the other hand, the power of giveaways may prompt people to respond in unconscious ways. Most notably, they might feel obligated to buy more when something is free – “reciprocating a favour” despite the fact that the “favour” wasn’t requested in the first place.