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Money Lives
Improving financial capability using
behavioural science and ethnography
Refining the definition of ‘financial capability’
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This research intended to help the Money Advice Service understand how
context, environment, culture, seasonal changes and aspirations influence and
change peoples’ financial capability and behaviour.
Rational
model
Behavioural
model
Specifically, we were aiming to:
1. Understand financial behaviours
2. Refine the definition of financial capability
3. Develop interventions targeting gaps in capability
Why ethnographic research?
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Ethnography is the description of specific human cultures and
is the foundation of anthropological knowledge.
•The key difference between ethnography
and other qualitative approaches is its
emphasis on observation.
• Analysis yields patterns of actual
behaviour rather than reported behaviour
•Ethnographic studies are characterized by
immersion into the lives of subjects, from
hours to weeks to years at a time.
Longitudinal research with 72 households
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• 48 families took part in the study
• Each family was visited 4 times in 9 months.
• Half of these families were filmed, half were not.
• Each visit lasted between 3-6 hours, amounting to over
1100 hours of interviewing and observation
• Included England, Wales, Scotland and Northern Ireland
Longitudinal research with 48 participants
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Number
of
Families
Socio-economic
Class
Age
Technological
usage
Financial vulnerability
12
45-64
Upper Middle
class
Very confident
Least financially
vulnerable
10
Older group
(more
retirees)
Non-working
Not confident
Financially comfortable
8
25-44
Lower Middle
class
Confident
Financially
8
Slightly older
Working class
8
Young
Working class
6
Young
Skilled Working
class
Not very
confident
Relatively
confident
Somewhat
confident
33 interviews in England
9 interviews in Scotland
5 interviews in Wales
5 interviews in Northern Ireland
Risk averse
Vulnerable and not in
control of finances
Not worried about
finances
What factors make up financial capability?
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Making
Ends
Meet
Keeping
Track
Planning
Ahead
Financial Capability: Beyond Skills & Knowledge
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Skills
The emotional, cognitive and/or behavioural skills and capacity
to engage in the necessary thought processes for financial
management.
Knowledge
The level of knowledge and awareness needed to find,
understand and evaluate information in order to make financial
decisions.
Attitudes
Motivation
Opportunity
An expression of the underlying beliefs that may influence
behavioural intention and may also be influenced by social
norms.
The brain processes that direct behaviour, including automatic
(unconscious) and reflective (conscious and considered)
mechanisms.
Factors that lie outside of an individual that may influence their
financial behaviour. It includes both social opportunity (i.e. the
networks they have) and physical opportunities (e.g. the area they
live in or technology they have access to).
What were we looking for?
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Capability
Motivation
Opportunity
Behaviour
Fishbein et al.
“Factors influencing behaviour and
behaviour change”
(Handbook of Health Psychology, 2001)
Determinants of Behaviour
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Susan Michie et (2011)
The Behaviour Change Wheel
Implementation Science
Anatomy of Motivation
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Reflective System
• Controlled
Automatic System
• Uncontrolled
• Effortful
• Effortless
• Rule-based
• Associative
• Slow
• Fast
• Conscious
• Unconscious
• Rational
• Affective
Anatomy of Automatic Motivation
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Framework coded for financial capability outcomes
Behavioural Determinants
Conditions
Ability Psychological
defined as the
individual’s
psychological and
physical capacity
to engage in the
activity concerned
Physical
Mechanisms
Level of knowledge,
awareness, appropriate
(emotional, cognitive
and/or behavioural) skills
and capacity to engage
in the necessary thought
processes such as
comprehension,
reasoning etc
Making ends meet
What to look for
Enabler
This is about
ability to perform
- do they find it
difficult or not?
Using tools to aid
budgeting - online or
using a spreadsheet/
book
Self- efficacy is
also important do they believe
they can't do
things?
Earmarking money for
different outgoings mentally or physically
separating them into
piles
Are they being
Physical skill
limited by their
development which is the body because
focus of training
they are disabled
in some way?
Barrier
Not aware that tools are
available or not
knowing how much
they have at any given
time.
No experience or
confidence in being
able to create own
budget
Relates mostly to the
old and infirm - do they
have difficulty online or
getting to banks in a
rural location.
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Framework coded for financial capability outcomes
Behavioural Determinants
Conditions
Opportunity Social
defined as all the
factors, social
and physical, that
lie outside the
individual that
make the
behaviour
possible or
prompt it
Physical
Mechanisms
Afforded by the
cultural milieu that
dictates the way that
people think,
including the set of
shared values and
practices that
characterize
institutions and
groups
Making ends meet
What to look for
Awareness being
raised by people
they know - this is
about receiving
information NOT
action
Enabler
Someone telling them
about ways of
budgeting or tools
available
Barrier
Groups of friends /
peers that encourage
you to spend beyond
your means - on going
out, buying gadgets
they can't afford
High levels of choice
The infrastructure or
and competition in local Lack of choice over
technology available
area. Are people
where to buy products
for people, which can Level of access to
'living off the land' - e.g.
guarantee
services or products
Buying / selling things Transport costs to
sustainability of the
that they find, growing shops/ banks
target behaviours
food, etc.
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Behavioural Determinants
Conditions
Mechanisms
Evaluation – usually based on
information provision and incentives
Reflective -usually
targeted in interventions Goal setting - including abstract longMotivation based on cognitive
term goals and short-term goals
defined as all those brain processes
behavioural therapy or
that energize and direct behaviour,
public policies that
which includes reflective and
include information
automatic mechanisms
provision and economic
Planning - specifying where, when,
incentives
and how to execute an action
What to look for
WHY? - weighing up the pros and cons of
something
WHAT? - thinking about the outcome you
want to achieve
HOW? - creating an action plan to achieve
an outcome
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Behavioural Determinants
Conditions
Mechanisms
What to look for
Messenger - we are heavily
This is about their decision to listen to or
influenced by who communicates
ignore something purely because of who
information to us
has said it.
Incentives - our responses to
incentives are shaped by predictable
In the moment decisions based on
mental shortcuts such as strongly
perceptions of getting a 'good deal'
avoiding losses, hyperbolic
discounting, and mental accounting
Norms - we are strongly influenced by
Desire to be like those around you
what others do
Defaults are the options that are preDefaults - we ‘go with the flow’ of preselected if an individual does not make
set options
Motivation an active choice
defined as all those brain processes Automatic People are more
that energize and direct behaviour, predominantly influenced
likely to register stimuli that are novel
which includes reflective and
by the context - we do Salience - our attention is drawn to
(messages in flashing lights), accessible
what is novel
automatic mechanisms
not think about these
(items on sale next to checkouts) and
simple (a snappy slogan).
Priming - our acts are often influenced Sounds, sights and smells that draw us in
by sub-conscious cues
or repel us.
People can respond emotional to words,
Affect - our emotional associations
images and events and their mood can
can powerfully shape our actions
impact decision making
Commitments - we seek to be
If you say you will do something you are
consistent with our public promises,
more likely to do it.
and reciprocate acts
We tend to behave in a way that supports
Ego - we act in ways that make us feel
the impression of a positive and
better about ourselves
consistent self-image.
Keeping Track
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Analysis:
--> 'Observations' (interview responses plus observational notes by the team)
--> 'Themes' (thematic analysis)
--> 'Framework' (COMB)
--> 'Barriers' (stats)
Observation: "AOMMF51: Never keeps track and doesn't remember all the things that
she spends money on - though says that she remembers"
Keeping Track
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Making
Ends
Meet
Keeping
Track
Knowing how much money you
have available at any one time.
Planning
Ahead
What did we find?
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Keeping Track
http://vimeo.com/85435718
What were the key barriers?
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High confidence use of
mental accounting
Abilities
Organisational skills
Financial illiteracy
Keeping
Track
Sense of control
Default behaviour
Motivations
Checking can have a
negative emotional
impact
Social Norms
Email Reminders
Opportunity
No access to Internet
banking
No access to smartphone banking apps
What were the key barriers?
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(Frequency = 23)
Ability
p = .144
(Frequency = 15)
Psychological Ability
Mental Accounting
Financial literacy
p = .047
(Frequency = 8)
Physical Ability
Lack basic literacy
and numeracy skills
Mobility issues
Opportunity
(Frequency = 9)
Physical
Opportunity
Social Opportunity
Default behaviour
Motivation
(Frequency = 18)
Automatic
Reflective
Checking can have a
negative emotional
impact
Social Norms
What were the key enablers?
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(Frequency = 28)
Ability
(Frequency = 25)
Psychological Ability
Organisational skills
Technological skills
p = .093
Physical Ability
Opportunity
(Frequency = 15)
Physical
Opportunity
Social Opportunity
Default behaviour
Motivation
(Frequency = 28)
(Frequency = 22)
Automatic
Reflective
Social Norms
Sense of
control
Checking: what do I have?
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An intervention designed to increase participants’ knowledge and awareness of their
balances.
• Participants were defeated by complexity of monitoring finances.
•
Finding opportunity
•
Planning and memorizing information
•
Retaining the information until next time.
• Reliant on mental accounting errors
• Those who did monitor had great organizational skills
• Used habit formation theory
• Given a planning sheet & credit-card sized record card
• Linked this process this to a pleasant activity.
4. Checking: The Intervention
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Those who did not complete the task:
• felt have enough of a buffer in accounts
• felt negative emotional impact
Those who completed the task:
• made them more aware of their position
• better able to live within their means by no
longer ending the month in overdraft
• accessed new checking services such as
online banking or banking apps
A credit card sized piece of paper to
fit into a wallet / purse
Making Ends Meet
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Making
Ends
Meet
Keeping
Track
Planning
Ahead
Living within your means and
not running out of money or
exceeding your income.
What did we find?
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Making Ends
Meet
http://vimeo.com/85435717
What were the key barriers?
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Unaware of budgeting
techniques and tools
Not keeping track
Share offers
Abilities
Making
Ends
Meet
Emotional hit
Anchoring
Motivations
Social Rank
Social Norms
Opportunity
Use friends and
families
Share offers
Ego
Seasonal impacts –
work and events
What were the key barriers?
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(Frequency = 27)
Ability
(Frequency = 15)
Psychological Ability
Mental Accounting
Financial literacy
Physical Ability
Lack basic literacy
and numeracy skills
Opportunity
(Frequency = 25)
Mobility issues
Physical
Opportunity
Social Opportunity
Affect
p = .000
Motivation
(Frequency = 64)
(Frequency = 55)
Automatic
p = .000
Reflective
Ego
Social
Norms
Social
Rank
What were the key enablers?
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(Frequency = 28)
Ability
(Frequency = 21)
Psychological Ability
Numeracy skills
Physical Ability
Opportunity
(Frequency = 35)
Physical
Opportunity
(Frequency = 26)
Social Opportunity
Share offers
with friends
p = .002
Default behaviour
Motivation
(Frequency = 57)
(Frequency = 22)
Automatic
p = .508
Reflective
Social Norms
Checking: what do I have?
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An intervention designed to increase participants’ knowledge and awareness of their
balances.
• Participants overweight social rank
•
Seek to increase social rank by spending
•
Receive emotional gratification
•
Reinforces spending behaviour
• Permit ego and affective mechanisms
• Substitute the associated costs
• Participants give blank card sleeve
• Wrote down things to avoid buying on side
• Wrote down substitutes for those things on the other side.
Substitution – what could I have instead?
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An intervention to encourage participants to curb areas of expenditure they found
difficult to control by substituting them with similar, but less costly, purchases.
Substitution: The Intervention
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Most used the tool and took pleasure in recording
their progress
Encouraged participants to take control of their
expenditure:
•
begun to transfer the principles to other areas of
spending
•
feeling of empowerment and in control of their
money
Depended on suitability of the alternative chosen
and timeframe substituted
•
chosen alternative must give equivalent instant
gratification
A personalised sleeve that folds
around debit/credit card
Planning Ahead
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Making
Ends
Meet
Keeping
Track
Planning
Ahead
Thinking about the future and
putting appropriate plans in
place to help you realise your
goals or cover the costs of
future events.
What did we find?
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Planning ahead
http://vimeo.com/85435716
What were the key barriers?
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Making goals
without plans
Abilities
Do not understanding
financial products such
as pensions
Financial knowledge
Temporal Discounting
Risk averse
Planning
Ahead
Account ‘buffers’
Investments in
children
Optimistic about the
future
Motivations
Opportunity
Sporadic employment
Reliance on parents
Use of friends within
financial services
Tangible future
What were the key barriers?
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(Frequency = 18)
Ability
(Frequency = 13)
Psychological Ability
Mental Accounting
Financial literacy
Physical Ability
Opportunity
Physical
Opportunity
(Frequency = 15)
Social Opportunity
(Frequency = 10)
Financial network
p = .000
Motivation
(Frequency = 43)
Incentives
Temporal
Discounting
Automatic
p = .170
Goal-setting
Reflective
Evaluative
What were the key enablers?
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(Frequency = 29)
Ability
(Frequency = 21)
Psychological Ability
Numeracy skills
Physical Ability
Physical Opportunity
Opportunity
(Frequency = 19)
p = .000
Motivation
(Frequency = 68)
(Frequency = 26)
Social Opportunity
(Frequency = 20)
Automatic
p = .001
Share offers
with friends
Default behaviour
Social Norms
Goal-setting
(Frequency = 48)
Reflective
Evaluative
(Frequency = 18)
Checking: what do I have?
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An intervention designed to increase participants’ knowledge and awareness of their
balances.
• Motivational factors (automatic and reflective) were greatest barriers
• Reflective motivation were the greatest enablers
• Participants asked to set a financial goal
• Participants given a planner sheet to monitor financial goals.
• Asked to monitor on weekly basis
• Intervention promoted goal-setting and planning mechanisms
• Affective mechanisms encouraged participants – picture to represent their goal.
• Picture was linked to goal
• The budgeting tool was visually salient
Planning - what’s my potential to save?
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An intervention designed to encourage participants to work towards a financial goal with
the help of a budgeting tool
Planning: The Intervention
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A spreadsheet that enables people to
plan their expenditure and save
Empowered them and given them a
sense of control over their finances
Understood benefits of aggregating
spending in different areas
Became very conscious of spending
Visual features and use of colour was
appealing
More effective for working towards a
savings goal (as easier to visualise)
rather paying off debt
Reframing - how should I think about my money?
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An intervention aimed at encouraging participants to think about their incomings over
different periods of time in order to prompt richer levels of evaluation and planning
around spending, debt and saving.
Reframing: The Intervention
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Participants who relied solely on benefits
seemed to take the most from the exercise
Prompted discussions about the
possibilities of returning to work
Made them feel more in control of finances
The longer-term figures were much higher
than expected and this encouraged thinking
how small weekly savings could add up
A poster to go on the fridge
3. Methodology for developing behavioural interventions
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1. Identify desired outcome
e.g. budgeting or savings
2. Identify the important
features leading to different
levels of financial capability
e.g. skills, knowledge,
opportunity, attitude and
motivation
3. Use behavioural framework
as a checklist tool to evaluate
potential interventions
4. Develop hierarchy of
intervention combinations to
be tested in specific context
5. Testing to identify
effectiveness of intervention
6. Adjust design of
intervention for specific
population group if required
7. Implement intervention
and monitor behaviour
change effects
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Thank you!
ivo.vlaev@wbs.ac.uk
antony.elliott@fairbanking.org.uk
katrina.leary@ipsos.com
ella.fryer-smith@ipsos.com
oliver.sweet@ipsos.com
suzanne.hall@ipsos.com