Third-Year PhD Student Rayyan S. Mobarak Explores Strategies to Enhance Saving Deposit Behavior
Rayyan S. Mobarak, a PhD student at the University of Maryland, College Park’s Agriculture and Resource Economics Department
In a recent study featured in PNAS Nexus, Rayyan S. Mobarak, a PhD student at the University of Maryland, College Park’s Agriculture and Resource Economics Department (AREC), along with multiple coauthors, conducted a 2-month campaign investigating whether various email reminder campaigns that employ insights from behavioral science, can induce monetary savings for Americans. In collaboration with a major US bank, the study gathered almost 2 million participants to test seven different behavioral interventions that have been successful in previous contexts, in order to shed light on which intervention is best-performing and externally valid.The research promotes economic sustainability that AREC strives for, as it encourages Americans to contribute to savings.
The study results demonstrated that the most effective campaign (weekly saving reminders), increased the monthly likelihood of a one-time savings deposit by 1.32%.The campaign consensus estimated that this email intervention could generate total savings between $6.1 million and $9.9 million across the study population.
Although the effects are small, the email interventions are extremely low cost and easy to implement. This research remains relevant as the rate of savings deposits among Americans remains low (39% having less than even a month of income saved). The study highlights the need to foster economic resilience among vulnerable Americans who are struggling to pay living expenses. The strategies implemented in this study may produce slight outcomes, but consistently sharing these emails would provide gradual financial growth.
PhD student Rayyan S. Mobarak has diligently devoted his studies to agriculture and health economics. His commitment to his research reflects our department's mission of applying meticulous research to confronting real-world issues and developing promising solutions. Through this interview, we explored the motivations behind this study, the challenges he faced, and what he hopes to accomplish.
Agriculture and Resource Economics Department (AREC): Could you explain your motives and process throughout this research?
Rayyan S. Mobarak (RSM): The problem we're trying to solve is very fundamental. It’s the fact that a lot of people in the US, or anyone in the world, have trouble saving money. Close to half of the people in the US are currently having trouble with even one month of income. There have been strategies in the past to help get people to save, but these have been tested on a small sample of people in developing countries. So we wanted to do a very large-scale intervention and try a lot of different strategies that have been used in behavioral science previously to try to see what sticks is successful across a large population.
AREC: What were the results of this research? What were you able to get out of this study?
RSM: I would say the most important result is that people seem to be facing an action-intention gap. They want to do something, but their memory loss is preventing them from doing so. So we found that sending weekly reminder emails just asking them to save money was pretty successful in actually making saving deposits. We didn’t expect them to have large effects where it solved the entire issue. But it does produce economically meaningful increases in savings, given that this was a very low-cost intervention. When you multiply the effects to everybody who was tested, it was close to $9 million in additional savings.
AREC: Why did you choose to do reminder emails? Why couldn’t you do reminders via text messages? What were the implications?
RSM: Text messages can be another medium to explore. Some of my past research with the same team has shown that text messages are very successful in inducing vaccination behavior. There has been less work done on email reminders and so we wanted to fill this gap. There was also a convenience associated with using emails. The bank allowed us to define the study population as people who have opted in to receiving marketing emails. They were already getting communications from the bank, so we just incorporated our interventions into the emails sent.
AREC: Do you personally think we should have these reminders? What are the benefits and constraints to this idea of reminder savings?
RSM: Most of the costs into the research were fixed costs at the development stage. We designed the emails and then the bank implemented them. However, there was virtually no costs associated with sending the reminder messages. So in that sense, these reminder messages should be incorporated. However, the tradeoff isn’t a monetary cost. If you're a bank, and you’re bombarding participants with emails, you don’t want participants to opt out of marketing. So I think that’s the optimization problem; you want to send them reminders, get them to save but don’t want to bombard them as such that they get annoyed and opt out. This is something to consider when deciding on the frequency of reminders.
Full Journal Article Here: https://academic.oup.com/pnasnexus/article/4/9/pgaf280/8244974
