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May 16

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60% of Americans Prefer Saving Money—Interpret These Survey Results with Caution

According to Gallup’s annual “Economy and Personal Finance” survey for 2013, 60% of Americans prefer “saving” money while 37% prefer “spending” it. I reproduce Gallup’s chart below, which shows that respondents’ preferences for saving remain high since the economic downtown of 2008-2009.

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Even if we focus only respondents’ preferences rather than actual behavior, these results are potentially biased for several reasons, including:

  1. Insincere responses due to the negative connotations of “spending”. Respondents likely believe that saving is the “right” answer in terms of how a responsible adult should manage money. For this reason, spendthrifts are more inclined to misrepresent their true preferences in order to avoid judgment. In political polls, this phenomenon is known as the “Bradley Effect”—named after a black gubernatorial candidate, Tom Bradley, whose polling performance grossly overstated his electoral performance due to “social desirability bias” among poll respondents.
  2. For many respondents, being able to save implies that certain basic spending requirements have already been met. Without more context, respondents would likely assume that saving won’t come at the cost of missed meals, rent payments, or other necessary expenses. For this reason, respondents’ stated affinity to “saving” is partially an affinity to having enough money left over to be able to place some of it into savings.
  3. The meaning of “saving” is unclear because of the ambiguous wording of the survey question:

Thinking about money for a moment, are you the type of person who more enjoys spending money or who more enjoys saving money?

It is unclear from the question whether “saving” money means (i) setting money aside in a savings or retirement account, or (ii) spending less money on goods and services via bargains and sales. Gallup is almost certainly interested in the first meaning of “saving”. The second meaning of saving makes the question almost trivial: all economically rational, utility-maximizing individuals prefer paying less money for the same good or service. Nevertheless, it only takes a slim minority of respondents that thought of “saving” in the second sense to bias the survey results upward.

Taken together, these three issues highlight the importance of careful phrasing and interpretation of survey questions.

 

About the author

Benjamin Bohr

Benjamin is a manager at Fulcrum Financial Inquiry. He specializes in statistics and data analysis for use in high-stakes litigation, business valuations, and other financial matters.

Permanent link to this article: http://betweenthenumbers.net/2013/05/60-of-americans-prefer-saving-money-interpret-these-survey-results-with-caution/

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