The Behavioral Science Theory Behind Sawa’s Community Saving Platform

How the technology used to make people buy things they don’t need can help them transform their financial future

I have a big question: What are we worried about with artificial intelligence? Why do only 9% of Americans think AI will do more good than harm according to a Monmouth University survey, and only 15% of people feel more excited than concerned according to the Pew Research Center? We worry because while AI can enable us to do amazing things, it can also be used to create tremendous harm. AI feels like magic — exciting magic and scary magic, but magic nonetheless — because we are working with forces we don’t truly control or understand. The same is true of behavioral science.

In the tech world, we love talking about behavioral science, but we don’t have a common understanding of it. Most of the talk at the corporate level is about how to use behavioral science to create more consumption: increase customer engagement and customer loyalty. Or, when you take that drive to its logical endpoint, we literally build addictions to things like gambling and social media, even for kids.?

After all, “It’s no accident that Facebook is so addictive.” These UX decisions create “a sort of digital Pied Piper effect,” as Pia Ceres put it for WIRED. “There are the notifications that rope you back onto an app after you’ve closed it. There’s autoplay, the cascade of new and dazzling dopamine hits. There are the ‘live’ functions that fabricate a sense of don’t miss this urgency, gamification mechanisms like streaks, and nudges to share. All of them lead kids (and grown-ups) deeper into an app.” But, is it good that we’re doing that?

At Sawa , our thesis is this: If behavioral science can be used to make someone buy something they don’t need, we can also use it to help them save money and transform their financial future for generations.

We should all be striving for this: behavioral science for good.?

We’re not the only ones thinking this way. Richard H. Thaler and Cass R. Sunstein’s insightful and influential book Nudge: The Final Edition champions paying attention to the ways we are choice architects, and how we can use that influence to “attempt to move people in directions that will make their lives better.”1 That is, “to help people make the choices they would have made if they had paid full attention and possessed complete information, unlimited cognitive ability, and complete self-control.”2

We’re all busy and we have a lot going on, and the human brain is notorious for taking shortcuts that aren’t always in our best long term interest. We can use behavioral science to outwit those biases and make it easy to actually get where we mean to go. For a majority of Americans, that destination is a place of financial security, a place where they can easily weather life’s inevitable financial shocks. We know that many Americans can’t afford a $400 emergency, but it is one of our goals to change that.?

On one level, a lot of behavioral science is about temptation and nudges. For example, the temptation created by the “eat more, they’re healthy” message of Healthy Choice’s reduced fat (but full sugar) cookies that were such a phenomenon in the 1990s. On the flip side of temptation are commitment mechanisms that use behavioral science to augment our self-control. Take the Christmas savings clubs, which were especially popular in the 1960s and 70s.3 Customers looking to have enough money for their holiday spending would make weekly deposits to an account? which they could not make withdrawals before November 1 (unless they paid a fee). They wanted this inflexibility, as it was actually an assurance that come the holidays, they’d have money saved.??

Then there are the little nudges that change our behavior, like the placement of trash cans make us less likely to litter. When there are trash cans on every corner, more than we have trash to fill, we throw away more trash. Some of those trash cans are for collecting the trash, and the others are for nudging us to use the trash cans. Sometimes seemingly inconsequential, invisible things are nudges, too. For example, people are more likely to save when they’re paid bi-weekly rather than monthly “because twice a year they get three paychecks in one month, and many bills come monthly.”? Similarly, researchers found that automatic enrollment in a company’s retirement plan, an opt-out rather than opt-in structure, increased enrollment by 35%. These are all examples of nudging for good.?

The thing is, we can build any world we want.

We can create any future. When we’re building apps and launching platforms we’re making non-neutral choice architecture. We are tempting and we are nudging.?

So my questions for us all are these: What temptations are we creating? What self-control and commitment devices are we making available? And what defaults are we setting? In short, what good are we doing? Let’s agree to decrease feelings of financial fragility and hopelessness and change the financial future for generations together.

1 Thaler, Richard H., and Cass R. Sunstein. Nudge: The Final Edition, Penguin Books, London, 2022, p. 8.

2 Ibid. p. 7.

3 Ibid. p. 58.?

? Ibid. p. 14.