Essentially a savings account connected to Crimson Cash that would ideally have the federal interest rate (however low), CRIMSON SAVINGS is my proposed solution to improve college students’ saving behavior regarding delayed gratification. Harvard students would experience net positive benefits in the long run, and the Harvard adminsitration itself would have either a net neutral or net positive effect.
(logo; to be on right side of existing crimson cash logo on crimson cash website)
How It Works:
1. Upon matriculation, students will be automatically enrolled into this Crimson Savings account, and would have to physically opt out through visiting the crimson cash office in person and requesting to be opted out (thereby lowering the chances of opting out).
2. Each time the student adds money into their Crimson Cash account, a page as part of the confirmation pop up (appearing before the final confirmation itself, which would require a next button) students will have the opportunity to have x% of their added amount (default 10%), conveyed in a suggested numerical amount based on the default 10%, transferred to a savings account. Represented in a prospect theory framework, students will see the option of having this money “lost” due to irregularities in printing, Lamont Cafe, and other prices, or having this money simply placed in their Crimson Savings account. I am choosing the present the information in this way because research shows that people are more loss-averse (1), and that the “displeasure associated with losing a sum of money is generally greater than the pleasure of associated wuth [gaining] the same amount.” (2) Due to the fact that pop ups are always annoying, there will be an option to set your percentage decision to a fixed amount so you don’t have to input it each time.
3. “If you really want to build capital, put it where you can’t spend it” (3). Students will not be able to easily touch the money in the CRIMSON SAVINGS account until graduation, a process that will be tied in with other graduation activities. For exenuating circumstances they will be able to contact the crimson cash office; for leisurely expenses they will have to pay a stiff penalty a la CD, 401(k), and 529 plans.
4. Account balance can always be accessed through the crimson cash website, which will have information on student loan debt payments, grad school scholarships, and rent price information on top cities Harvard students take jobs at, implicitly nudging students to associate the CRIMSON SAVINGS account with important post-graduate expenditures.
5. Receiving the money will be incorporated into traditional senior de-registration process via a mandatory 10 minute check out meeting at the Crimson Cash office. There, the student will be given information on student loan debt payments, grad school scholarships, rent price information, or other post-graduate related expenditures. If they choose to apply their final CRIMSON SAVINGS amount towards a educational, career-oriented, or other non-leisure endeavor, they have the option to have Harvard take care of it for them (e.g. transfer the funds to their student loan debt, purchase plane tickets to their new job’s destination on their behalf, etc.). Otherwise, the money is mailed in a check to their designated residence.
The three factors in Fogg’s Behavior Model, (motivation, ability, trigger) apply in this case (4): many college students are already motivated to use crimson cash for various expenditures around campus e.g. printing, and many students, especially lower-income, are motivated to take advantage of ways to save money; many students have the ability to desposit at least 50 cents into their crimson cash accounts (which would then have 5 cents of it transferred to the savings account if they kept with the 10% defualt) on a quasi-regular basis; and a built-in trigger already exists with any crimson cash deposit in the form of a confirmation page, therefore one more step regarding the transfer (that can be done away with the automatic setting) takes advantage of the fact that the student is already taking the time to do everything else.
Data Collection Factors:
-What percentage of student body uses crimson cash at all?
-What is the mean and median regularity with which students upload money to their accounts? What is the breakdown along socioeconomic status?
-What is the mean and median amount of money uploaded per one time per student? What is the breakdown along socioeconomic status?
-What is the mean and median amount of money spent between each upload? What is the breakdown along socioeconomic status?
-What is the location breakdown of where the money is spent (e.g. printing, CVS, the vending machines, etc.)? What is the breakdown along socioeconomic status?
The above factors affect the desirability of the program; if a majority of the student body utilizes crimson cash and uploads money quasi-regularly, then the program may be desirable. If it is revealed that one socioeconomic level of students would benefit relatively more than their counterparts from this program due to their particular usage of Crimson Cash, then perhaps CRIMSON SAVINGS could tweak its program or its marketing accordingly.
It is in the interest of Harvard to encourage positive fiscal behavior in its students, and this is a way to do so that is founded within a program they already have.
Sources:
1. Kahneman, Daniel (2003). “A perspective on judgment and choice: Mapping bounded rationality”. American Psychologist. 58 (9): 697–720. doi:10.1037/0003-066X.58.9.697
2. Tversky, Amos, and Daniel Kahneman. “The framing of decisions and the psychology of choice.” Environmental Impact Assessment, Technology Assessment, and Risk Analysis. Springer Berlin Heidelberg, 1985. 107-129.
3. Fogg, Brian J. “A behavior model for persuasive design.” Proceedings of the 4th international Conference on Persuasive Technology. ACM, 2009.
4. Couch, Christina. “Spend-to-save accounts: helpful or hoax?” Bankrate. http://www.bankrate.com/finance/savings/spend-to-save-accounts-helpful-or-hoax-1.aspx
