How do you encourage people to make wise financial decisions? One solution is to put them in front of the television and make them watch a soap opera. A study by the World Bank shows that this medium can be effective to protect people for financial missteps. The website eZonomics delved deeper into the subject and drew up some very interesting studies over our behaviour.
Watching a TV soap opera might be considered a guilty pleasure. Curling up on the couch to catch the latest plot twist and discover which character’s been caught doing what. It’s fun, but could it also be educational?
Some intriguing new research for the World Bank suggests soap opera fans can actually learn lessons about money from characters’ mistakes. When familiar characters on the TV act in financially reckless ways, the study says many people learn the lesson and apply it in their own lives.The finding taps into the well-established idea that people are social creatures, heavily influenced by what those around us are doing – even if we don’t realise it.
Do as I do, buy as I buy
Similar types of situations – where “social norms” or the actions of others influence what someone does – have been recorded around the world. For example, people are twice as likely to buy something on an airplane if the person next to them does, according to a recent working paper. In the Netherlands, researchers found that after people win the lottery, their neighbours are more likely to buy a new car. In the United States, an energy report company reduced energy usage – and therefore money spent on bills – simply by telling customers how little their neighbours were using.In the UK, HMRC improved tax collection rates in a similar way: a line was included on their letters stating that the majority of other people in the recipient’s neighbourhood had paid their taxes. And other examples of this phenomenon are explored by economist Chris Dillow in a blogpost for eZonomics, Beware your neighbour.
Small screen, big influence
The World Bank study used a popular soap opera in South Africa called Scandal! to test whether viewers learn from the TV drama. The financial storyline spanned two months and featured one of the leading characters borrowing excessively and irresponsibly through hire purchase, gambling, ending up in financial distress, and eventually seeking help to find her way out. Researchers Gunhild Berg and Bilal Zia wrote that viewers of the show had significantly higher financial knowledge of the issues raised and exhibited better financial behaviour by the end of the study. Specifically, Scandal! viewers were almost twice as likely to borrow from formal sources, less likely to engage in gambling, and less prone to enter hire purchase agreements than a different test group that viewed another soap opera.
By Nathalie Spencer, behavioural economist and independent researcher.
Read the full article on eZonomics, ING's website that is about money and life. It combine ideas around financial education, personal finance and behavioural economics to produce regular and practical information about the way people manage their money – and how this can affect their lives.