Peer Pressure is… Good!
A new study shows that people significantly change their spending habits after comparing finances with their peers
Several months ago we were contacted by a team of professors from the University of Chicago and the University of Maryland — they had seen an ad for Status Money on Facebook and wanted to study the effects of peer comparisons on people’s spending behaviors.
For some background, Status Money is the first personal finance platform that shows users how their finances compare with millions of people like them (same age, income, location, etc.). It helps everyone benchmark their income and spending and automatically recommends ways for them to save money.
The professors analyzed the spending habits of more than 6,000 Status Money users and made a startling finding — users who saw that they were spending more than their peers reduced their spending by an average of 23%!
Interestingly (although perhaps not surprisingly), the spending reduction came exclusively from discretionary categories including restaurants, entertainment, shopping, and travel.
They also discovered that the lowest income users changed their behaviors the most! Users earning $40,000/year on average reduced their spending as a percent of income by 19%, while users in the highest income group reduced their spending by 10%.
The entire Status Money team is very excited about the potential for peer comparisons (and intelligent recommendations) to help everyone live a better financial life!
If you haven’t joined Status Money yet, check it out at www.statusmoney.com!
For a detailed summary of the study, please visit:
