I’m interested in the psychology of debt – what makes it harder or easier to tackle a debt problem. I think you may be able to make use of the Hawthorne Effect to help you clear your debts. Never heard of it? Read on!
The Hawthorne Effect is the tendency for humans to change their behaviour simply because they are being studied. It was named after the factory where it was first noticed 90 years ago.
The original experiment
Between 1924 and 1932 a series of studies looked at whether the level of light in the Hawthorne Works near Chicago affected the workers’ productivity. It did, but later analysis in 1955 showed an unexpected effect: whenever the level of light was changed in the factory, up or down, there seemed to have been be an improvement in productivity, which later declined to the normal level. It was suggested that the increased output had initially occurred merely because the workers knew they were being studied.
So can you set up “a debt experiment” which will have a positive effect on your ability to pay off debt? That could work by reducing your expenditure directly or by making it easier to budget.
Set up a debt experiment and benefit from the Hawthorne Effect
Here are some practical ideas.
A spending diary – observe yourself!
Lots of people feel their money is just leaking away somewhere. Until they track down where it’s being spent, it’s impossible to control it – that’s why a spending diary is such a useful tool.
But many people who start keeping records find an unexpected benefit. Not only do they now know where their money is going, but they often decide not to buy that extra something because they don’t want to record that they have bought it.
This is the Hawthorne Effect in action – even observing yourself can make you want to improve what you are doing so that you look better!
Of course you don’t want to have to keep a detailed spending diary permanently, that would be really painful. But neither do you want to lose those this psychological boost.
The good news is that if you switch to an active approach to budgeting you will still be studying your expenditure – have a look for apps that will help you to keep track of what you spend.
Enlist other people to observe you!
Do you have a best friend who also wants save money – perhaps to pay off their own debts, perhaps to get a house deposit? Then you could both “report in” on how things are going and compare notes.
This is the reason that Weight Watchers works for many people – the fact that you know you will weigh in at the group is a real spur to say “no” to that pudding.
You would have to know someone pretty well to want to discuss all the details of your finances with them. But a more casual approach can also work – just someone who also wants to cut back on grocery bills, or who would be happy to check his utilities at the same time as you check yours could be that boost you need to keep on trying.
An online community could be even better. Many online forums have boards devoted to money-saving or tackling debt, from Reddit and the Motley Fool to MumsNet and NetMums. The biggest in Britain that is dedicated to money is probably MoneySavingExpert’s Debt-Free Wannabe board. This also has sub-boards where you could keep your own diary of progress or challenge yourself, by having a No Spend Day or saving £2 per day in a sealed pot etc.
A bit of fun, sometimes wacky, it feels like having company along the way, somewhere friendly to hang-out for half an hour in an evening … all these things are good. And, if you get involved by posting, not just reading, you can benefit from that extra Hawthorne Effect incentive to succeed, because you will want to be able to report positively.
How piggybanking helps you budget
How to make resolutions you will keep
Joe Easedale says
This effect certainly exists and can be used as a force for good as regards you controlling debt, rather than allowing debt to control you.
I am reminded of my wife and I’s (mostly mine) last “In Debt Event”. We tackled it and never looked back. This was several years ago when our children were both under 10 and in receipt of pocket money. In getting a grip on our spending we looked at the current pocket money system and decided that it was chaotic. A regular weekly handout, odd top ups on demand from either of us, and lots of magazines and club subscriptions being paid for by us with the paper bill.
We had no wish to cut the amount of total spending money, so much as to understand and control it. So we made some changes. We added up all the various subs,payments mags etc that we were paying, divided by two to reach the same sum for each child, and made an announcement.
The total amount of money would not change, and in fact it went up a trifle for ease of rounding. BUT., from now on, we would not be paying for the magazines, or the subscriptions as well as pocket money, and other than for truly exceptional things, there would be no more top ups.
This we hoped would put a floor under the total spend for us, and also encourage the kids to decide what was important to them rather than just what they wanted.
Within a week, we noticed changes. Of particular note, many though by no means all, of the weekly magazines were cancelled, and more thought clearly was going into purchases. All in all, being given the responsibility, the kids took responsibility and prioritised their spending. I believe that this has served them well in their adult lives.