Don't stop thinking about tomorrow: Individual differences in future self-continuity account for saving

1. Context
2. The study
3. Key findings
4. Points to consider

• Context
• The study
• Key findings
• Points to consider

Context

Self-continuity is an aspect of personal identity that considers the extent to which the self of today relates to the self of tomorrow. Self-continuity varies by individual: some endorse a greater connection to their future selves than others.

One hypothesis explored in this study is that the closer the connection is between present and future self, the greater the likelihood is of the individual being prepared to defer consumption/gratification for their future self. On the other hand, the more the individual feels they will change the less ‘incentive’ there is to defer consumption for that future self.

These differences in individuals’ future self-continuity could affect their future financial wellbeing.

The study

The report details three experiments exploring the future self-continuity hypothesis:

• Study 1 devised a measure of self-continuity and tested its reliability and validity in predicting valuation of future rewards. It looked at future self-continuity and temporal discounting (the tendency to discount rewards as they approach a temporal horizon in the future or in the past) with 164 undergraduates from Standford University.
• Study 2 looked at how future self-continuity and self-descriptive consistency (i.e. perception of personal traits) vary over time with 40 individuals from the Stanford University community.
• Study 3 examined future self-continuity and actual savings behaviour using a sample of 155 adults from the San Francisco Bay area.

Key findings

Overall, the research confirms that individual differences in endorsement of self-continuity may influence valuation of future rewards. Unexpectedly, in the view of the researchers, the study also suggests that future self-similarity has a more robust correlation with temporal discounting of reward than does future self-connectedness.

Therefore the conclusion is that by enhancing future self-continuity we might be able to encourage people to save for the future.

Key findings were as follows:

• Study 1: Individual differences in future self-similarity significantly predicted the number of delayed choices made – supporting the hypothesis.
• Study 2: Similarity ratings on the future self-continuity scale correlated with percentage of matches between current and future self-descriptions, again supporting the hypothesis that individuals with higher self-continuity would show more matches in their endorsement of current and future self-descriptors. Study 2 also replicated the findings of Study 1 that higher levels of future self-similarity correlated positively with the number of delayed rewards chosen.
• Study 3: Endorsement of future self-similarity is positively associated with assets - in other words, the more similar an individual feels to his or her future self, the more assets he or she has accumulated.

Points to consider

• Methodological considerations:
  • The ‘laboratory’ experiments were based on a sample of university students, which means that the findings may not be replicable among a wider population.
  • Seeking to create more realistic/matching timescales might create major methodological problems as relevant timescales might need to be measured in months or years.
  • Study 3 indicated a link between real-life self-continuity and asset accumulation but it did not show a similar correlation with avoidance of negative outcomes such as indebtedness.
• The research identifies a strong correlation between future self-continuity and saving, but cannot confirm the causal direction of the relationship.