Peer pressure, applied well, boosts financial health
Wednesday, August 23, 2017
When you’re training for a fitness goal, a workout buddy can be your best asset. She’s the one who cheers you on good days and pushes you on bad days.
When you’re working to reach a financial goal, friends can be equally helpful. Peers can influence how much you save for retirement, determine when you choose to retire and even shame people into paying their taxes , studies show.
People don’t change their habits when the stakes are low, says Dean Karlan, a Yale economist who has studied incentives and accountability. Placing your money or reputation on the line with a goal raises the cost of failure, which acts as a motivator, he says.
Photo courtesy of Paul Falardeau.