As humans, our failings are epic. Some of us eat too much, lie to ourselves, don’t exercise enough, and spend so much money that we have nothing left for that vacation in Hawaii. But technology, Dan Ariely believes, might save us from ourselves.
Ariely, a professor of psychology and behavioral economics at Duke University, is an investor and the chief behavioral economist at Qapital, a Swedish-startup geared toward encouraging Millennials to save.
Here’s how he explained the reason many young people fail to save—or spend—effectively:
The most difficult problem is our lack of desire to think about it. You go to the supermarket and you buy and buy and buy. People always underestimate. Even the cashier underestimates. We don’t add up all our costs. We are supposed to think about it and think of all the things we want to spend on now versus later. But the reality is, we live in the moment and we make decisions in a myopic way without thinking about the big picture. It’s really, really hard. So we don’t do it.
Ariely says the app will force people to think about the opportunity cost of money, or what’s given up (saving for college) to get something immediately appealing (another bottle of rare gin). Users of the app can set a target—a $300 budget for groceries—and designate a savings goal that any extra money under that target will go towards. (Ariely himself is saving for a car.) Users can also pre-assign money to do the things they mean to do, but don’t. For instance, every $3 coffee purchase can automatically trigger a $1 donation to a charity (and perhaps start curbing expensive coffee habits).