Cognitive Design

For many Americans the cognition (or thoughts and emotions) involved in spending money are far more enjoyable than the thoughts and emotions involved in saving for retirement. We have a strong (some say overpowering) cognitive bias towards spending rather than savings.  Look at the level of consumer debt and the looming savings crisis and it is safe to say this bias is running us into serious trouble. 

For many consumers, telling them not to spend in order to save and avoid trouble down the road is not enough.  An alternative strategy is to design savings products that work with the cognitive bias rather than ask them to try and fight it .

A great example of this is the American Express One Card.

As of this writing you get 1% of your purchases deposited in a high-yield (5% APY) savings account with no fees. So you literally automatically save while you spend. Note this is very different than a card that gives you cash back. If you get cash back and you are a spender, you will spend it not save it. This card is linked to an FDIC-insured savings account that you can even make extra deposits to if you want.

There is a powerful cognitive design principle at work here. 

When it comes to designing programs or products that require behavior change, make the new behaviors an automatic consequence of something the customer already does (or is very willing to do).

Is this not what lottery tickets do? Consumers hate to pay tax but will gladly do it to buy some hope/excitement of winning big.