NEW YORK–The MetLife Foundation and Duke University said they are partnering to launch CommonCents Lab, an initiative that will apply behavioral economics to identify new ways to help millions of Americans improve their saving and spending habits.
Two North Carolina credit unions have already signed on to participate; additional partners are being sought.
The Lab will be managed by Duke’s Center for Advanced Hindsight, which is headed by Dan Ariely, the James B. Duke professor of psychology and behavioral economics at the university.
“It will partner directly with banks, credit unions, community colleges, employers and other nonprofit organizations to design, build and test solutions intended to help people make smarter choices with their finance,” said the two organizations. “It will focus on developing steps to help people build emergency, retirement and college savings, and make informed big purchase decisions and end-of-life financial arrangements.”
The CommonCents team and its research partners will also identify behavior-related challenges and design solutions, as well as implement randomized controlled trials to test those solutions in the real world, the two organizations said.
The gap between what people want and what they do is described by social scientists as the “intention-action” gap, according to Ariely. “We are supposed to think about all the things we want to spend on now versus later, but the reality is that we live in the moment and we make myopic decisions without thinking much about the big picture or the long term,” he said in a released statement. “The problem is that thinking about money the right way is really, really hard. So we don’t think about money the right way, and sometimes we just don’t think about our spending at all.”
Dennis White, president and CEO, MetLife Foundation, said, “Most people know that saving for emergencies, college and their retirement is great –– and they want to save. But knowing what is helpful and taking action to achieve it are two different things.” White added, “We’re excited to provide funding and to partner with the CommonCents Lab to help them identify new solutions that will get people to act.”
The Latino Community Credit Union and the Duke Credit Union, Durham, N.C., both of which are located near Duke University, have already committed to serve as research partners for the Lab next year. The Lab said it is also seeking three additional research partners. Applications for potential research partners will be accepted until Jan. 15, 2016, and can be submitted to commoncentslab.org.
MetLife Foundation funding will go toward developing two locations for the Lab; one in Durham, N.C., and another in San Francisco. The San Francisco lab will be focused on taking behavioral insights into product development. It will partner with financial technology startups on building solutions to key financial challenges. Startup partners currently include Digit and RetiremapHQ in California and Qapital in New York.
Kristen Berman, director of the CommonCents Lab technology team, said, “Can we increase savings balances if we change the name of financial accounts to represent long-term goals? Can we decrease spending by helping people focus on what purchases they might regret? We’ll take these hypotheses and others to design, build and test technology-based solutions that can be scaled to millions.”