Abstract:
This study tests and explains how the opposing preferences for commitment and flexibility
impact the saving behaviour of individuals who perceive financial scarcity in South Africa.
Those who perceive financial scarcity need to save to reduce the risk of unexpected financial
burdens, for increased financial resilience and to accumulate assets. In this context, saving
behaviour requires decision-making over time and under uncertainty. Prior research indicates
that individuals are prone to present bias and certainty-effect bias under these conditions,
which impact their saving behaviour adversely. Evidence also suggests that these biases drive
opposing preferences for commitment to save, but also for flexibility to access savings under
uncertain conditions.
The interaction between commitment and flexibility preferences in saving behaviour is not well
understood and requires further research in different contexts and subgroups. Thus, this study
primarily contributes to intertemporal choice under uncertainty literature as it relates to saving
behaviour when financial scarcity is perceived. Additionally, the study informs practice on
appropriate interventions and behavioural design elements for services and products offered
specifically to this customer segment.
The impact of hard and soft, or more flexible, commitment treatments on saving intention
(directly) and saving action (indirectly), were measured and compared between Intent and
Low/No Intent subgroups. Participants' allocation to one of these subgroups were determined
by their baseline saving intentions. The longitudinal experimental design of the study allowed
for within-group heterogeneity analyses over time (N = 405). Both the hard and soft
commitment treatments had immediate, positive effects on saving intention in both subgroups.
These effects endured, and saving intention continued to increase in the Low/No Intent
subgroup during the 30 days post-intervention. An intention-action gap was observed in both
subgroups, moderated by the temporal stability of saving intention.
These results suggest that baseline saving intention should be a key consideration when
selecting the most appropriate saving intervention for an individual. Further research is
required to determine why the particular hard and soft treatments were effective in the study’s
context. In addition, the intervention and research methodology should be tested on other
behaviours that also require decision-making over time and under uncertainty.
