Why Gyms Love January: Leveraging Behavioral Economics for Financial Health
People are famously irrational when it comes to financial matters. We can’t seem to resist wasting money on things that we know aren’t beneficial. MetLife Foundation‘s Evelyn Stark offers a painfully familiar example:
“We join gyms every January. We stop going every February. And yet people don’t stop paying for the gym until you have to renew – which is probably the following January. And you may actually renew, because you think, ‘This year, I’m going to go.'”
But the tendency doesn’t stop there. We all know retirement is coming, but many of us never manage to save enough money for it – even when we have surplus income. We blow our yearly bonuses and tax returns on frivolous things, rather than using the money for our long-term benefit. The list goes on and on.
Why do we make these self-defeating financial decisions, and how can we be persuaded to change them? Those are the questions that keep behavioral scientists up at night, and the answers could reshape financial services.
We spoke with Stark, assistant vice president and financial inclusion lead at MetLife Foundation, about the ways financial services providers are leveraging common psychological tendencies – not simply to maximize their own profits, but to help their clients spend less and save more. Check out her insights in the interview above – the latest NextBillion podcast. And subscribe to our podcasts on SoundCloud and iTunes, for more interviews with some of the leading thinkers in social business.
Photo credit: Penn State, via Flickr.
James Militzer is an editor at NextBillion.