Popcorn, envelopes and online banking collages

Yesterday, I heard about a really interesting strain of social/behavioural research.

Some of the thinking is being led by a guy called Dilip Soman who is a Professor of Marketing at Rotman School, University of Toronto (you can hear more from him on Dan Ariely’s podcast, Arming The Donkeys).

It goes something like this:

When people buy a bucket of popcorn at the cinema, they tend to eat the lot – no matter how big the bucket is. We’ve all been there, haven’t we?

http://www.flickr.com/photos/serendipitys/2827385395/

Soman and his colleagues wanted to see if they could curb the amount of popcorn that people ate.

So they asked some cinema concession stands to replace the single bucket of popcorn with four separate bags, whilst keeping the total volume of popcorn the same.

Perhaps unsurprisingly, people ate less popcorn. When asked why, the participants said that it was because they had to think for a moment before opening the next bag.

With the bucket, they just ‘went with the flow’, as it were. With the four individually-wrapped portions, they had to stop and decide whether or not they wanted to carry on.

Then Soman and his colleagues decided to perform the same experiment with cash and envelopes.

They worked with a not-for-profit organisation to distribute pay to construction labourers in India.

Some labourers received their cash in one envelope. Others received it in a number of envelopes. As with the bags of popcorn, the envelopes acted as a psychological barrier to go on spending. Those who received their salary in the most envelopes spent the least amount of money over the same period of time.

In other words, money in many envelopes is ’stickier’ than money in one envelope.

http://www.flickr.com/photos/socialbreakfast/216995061/

Next Soman and his team sought to strengthen the barrier even further by earmarking a portion of a few of the workers’ salaries for their childrens’ education expenses and,  most importantly,  placing pictures of their children on the envelopes in which this portion of the money was kept.

Guess what? Noone opened those envelopes.

So once you label money with its use, it becomes more sticky for that particular use. Adding pictures to represent the money’s use makes it even stickier. I guess because pictures are quicker than words in evoking emotions, like guilt?



So having listened to this podcast, I asked myself: what if you took this understanding and applied it to online banking, with the aim of helping people to save and spend more wisely?

You might replace a single, separate savings ‘pot’ on your online banking interface with a number of virtual envelopes which each represent a different expenditure (the electricity bill, the friend’s birthday present you’re saving up for, the holiday to the south of France etc.)

You might then build in some element of opt-in virtual ‘friction’ so that people are dissuaded from opening their envelopes unless absolutely necessary, just as they were in the real-life experiment, e.g. in order to release the funds, you have to use your mouse to literally tear the envelope open on screen (or something!).

But you might go even further and use personal images to represent each of your ‘envelopes’ (as Soman did to great effect in his experiment) so that your online banking interface looks more like a collage than a bank balance, where each image is attributed an appropriate financial value (which, at the very least, would make the online banking experience a little less dry).

http://www.flickr.com/photos/zachflanders/109721463/

You could then make the ‘friction’ aspect really dramatic – like your holiday photo literally going up in flames on screen if you were to ever release the allocated funds before the end date you’d set yourself!

Who thinks I’m on to something? Who thinks I’ve gone mad?