The Effects of Circular and Linear Time Orientations on Personal Saving Estimates and Savings Behavior

We examined effects of savings methods derived from cultural differences in circular and linear time orientations of consumers. Our results show that Chinese and American consumers differ in their use of time orientation-based savings approaches, and in amounts saved. Although American personal finance experts think of the linear savings method as more effective and are more likely to recommend it to consumers, in our studies, American consumers using a circular savings method provided an average of 74% higher savings estimates and saved an average of 78% more money. Our findings are robust to different operationalizations of time orientations, and cannot be explained solely through the differing emphases of consumers on the present vs. the future in these two orientations. The efficacy of the circular savings method arises from a combination of greater implementation planning and a lower future optimism regarding saving money.

Utpal Dholakia is a William S. Mackey, Jr. and Verne F. Simons Distinguished Associate Professor of Management at the Jesse H. Jones Graduate School of Business, Rice University in Houston, Texas. He has a master's degree in psychology, and a Ph.D. in marketing from the University of Michigan, a master's degree in operations research from the Ohio State University, and a bachelor's degree in industrial engineering from the University of Bombay.

His research interests lie in studying motivational psychology of consumers and online marketing issues such as virtual communities and online auctions. He also studies relational aspects of consumer behavior. He has published in a number of marketing and management journals, and consults with firms in financial services, energy, health-care and other industries.