Abstract
We conduct a randomized controlled trial (RCT) with a representative sample of U.S. citizens on Prolific, a survey platform. Our objective is to explore how capital market participation influences individuals’ consideration of opportunity costs in consumption versus saving decisions. Participants receive monetary compensation for completing the survey, which consists of three parts.
Experimental Design
Respondents are randomly assigned to one of two groups.
Group 1: Participants first indicate how they would adjust their spending or saving behavior in response to a hypothetical, unexpected, transitory income windfall. They allocate the windfall amount and respond to an open-ended question about their thought process, followed by structured questions about their reasoning. Next, they encounter a second scenario, where they must save the entire windfall amount, and share the return they expect to earn on it.
Group 2: This group encounters the same windfall scenarios but in reverse order. In the consumption scenario, they are also shown the return on savings they indicate earlier, presented as the opportunity cost of consumption.
Both group of respondents then revisit the consumption scenario, this time considering five alternative saving opportunities, and allocate the windfall accordingly.
Financial Profile and Sophistication
In the second part of the survey, all respondents report their current wealth distribution. Households holding wealth in capital market-related products are categorized into the investor group. Additionally, all respondents are asked questions about their financial sophistication (e.g., compound interest calculations, budgeting, or saving goals), risk aversion, and their level of precautionary saving.
Demographics and Behavioral Traits
The final part of the survey collects demographic information (e.g., employment status, education) and economic characteristics (e.g., household income, wealth, and debt levels).