Small Victories: Creating Intrinsic Motivation in Savings and Debt Reduction
Saving when faced with the immediate option to spend is an unpleasant but not conceptually difficult task. One popular approach contradicts traditional economic theory by suggesting that people in debt should pay off their debts from smallest size to largest regardless of interest rate, to realize quick motivational gains from eliminating debts. We more broadly define this idea as "small victories" and discuss, model, and empirically examine alternative behavioral theories that might explain it. Using a laboratory computer task, we test the validity of these predictions by breaking down this approach into component parts and examining their efficacy. Consistent with the idea of small victories, we find that when a mildly unpleasant task is broken down into parts of unequal size, subjects complete these parts faster when they are arranged in ascending order (i.e, from smallest to largest) rather than descending order (i.e., from largest to smallest). Yet when subjects are given the choice over three different orderings, subjects choose the ascending ordering least often. Given the magnitude of our results, we briefly discuss the possible efficacy of these alternative methods in actual debt repayment scenarios.
This paper benefitted from helpful comments at the 2012 North American Economic Science Association Meetings, especially Martin Dufwenberg and John Kagel, the 2013 National Bureau of Economic Research Summer Institute, and the Bush School Methods Brown Bag. We also received helpful comments from Gary Charness, Catherine Eckel, Pablo Brañas-Garza and Brandon Schmeichel. We especially thank José Gabriel Castillo, Gregory Cohen, Luke Franz, Matthew Liu, Laura Lombardo, Daniel Stephenson, Britnee Warmerdam, J. Forrest Williams, and Xiaoyuan Wang for help running, designing and transcribing data from experiments. We thank the International Foundation for Research in Experimental Economics for financial support for subject payments under their Small Grants Program. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Brown, Alexander L., and Joanna N. Lahey. "Small Victories: Creating Intrinsic Motivation in Task Completion and Debt Repayment." Journal of Marketing Research 52.6 (2015): 768-783.