Financial responsibility involves managing money sensibly by cutting back on unnecessary spending. Yet, fresh research from the University of Notre Dame reveals a common blind spot: people believe they're more financially responsible than their habits suggest—even chronic overspenders maintain this positive self-view.
“People generally have a positive illusion that they are financially responsible because it makes them feel good about themselves,” explains Emily Garbinsky, who recently published a study on financial infidelity.
Garbinsky collaborated with Nicole Mead of York University and Daniel Gregg of the University of New England in Australia to develop a targeted intervention. This approach counters self-enhancing biases by prompting individuals to reflect on their unnecessary spending patterns, ultimately motivating them to save more and align actions with their desired self-image.
The "excess spender" intervention features a concise five-question survey before savings decisions. Questions probe past habits like dining out over home cooking. Participants rate frequency on a continuous scale from 1 (once a year or less) to 7 (12+ times a year). The anchors ensure most responses cluster in the higher range, signaling frequent superfluous spending and prompting a reality check.
Prior studies show people judge themselves based on scale placement, so this realization spurs savings to restore their sense of financial responsibility.
Tested among students at Notre Dame and York Universities, plus online panels, the intervention proved effective. Notably, two studies with coffee growers in rural Uganda—one tracking earned income savings over time, another a financial windfall—confirmed its impact. “The latter is especially important in developing countries,” Garbinsky notes, “as policymakers increasingly explore large cash transfers for struggling families.”
Overall, this research highlights how rosy self-perceptions hinder savings worldwide. As Garbinsky concludes, “People everywhere aren't saving enough, often because they wrongly see themselves as financially responsible. Deflating this illusion can drive real change.”
