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Published: Friday, 2/14/2014


Urge to save

Novelist F. Scott Fitzgerald observed that the rich “are different from you and me.” His friend Ernest Hemingway responded: “Yes, they have more money.”

Mr. Hemingway was skeptical of supposed differences between those who are well off and everyone else. Were he still with us, he may have found some vindication in a new study conducted by researchers at the University of Pittsburgh and Arizona State University.

The study looked at the savings rates of 123 employed residents of a Phoenix homeless shelter for a month. Researchers initiated a contest that had residents vying for a $100 prize. On average, the savings rate went up 33 percent, but some failed to save anything.

The top 25 percent saved $607, on average, while the top 10 percent saved $1,000 or more. The researchers found that those who already were motivated to save did better with the incentive; those who would never bother to save were unmoved by the offer of a prize. The big savers had a strategy for leaving the shelter and living independently.

The researchers believe that the competition was successful in its first month because the homeless residents — who worked as janitors, cooks, and telemarketers, among other jobs — knew they were competing against each other and not people outside their group. They believed they had a shot to win if they competed on a level playing field.

Researchers are trying to find ways of creating incentives for middle-class people who don’t save nearly enough to do so rather than give up. Mr. Fitzgerald might be surprised to find that homeless workers have the kind of savings gumption that could change their lives. Mr. Hemingway probably would not be surprised at all.

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