How to research financial behaviour in a fast-changing market
Doing research on people’s financial behaviours can be difficult due to a range of money taboos, ethical issues, and practical matters. People can be very private about money and may be ashamed of their financial positions. Being wealthy can be as embarrassing as being poor, so asking people to talk about their financial positions is fraught with obstacles. Asking people to tell you their bank balance or how much debt they’re in strikes at the heart of people’s fears that they are using money incorrectly.
Even financial professionals face these fears: one economist recently told me that he avoids opening letters that will tell him that he’s losing money. If the professionals can’t generate the nerve to face their financial realities, what hope is there for the rest of us? If people seem inarticulate about money it’s fashionable to assume they’re financially illiterate—but the problem is just as likely to be fear, stigma, or other social issues. If researchers misunderstand these issues, our findings maybe limited or just plain wrong.
The key to doing research on money is to choose the right methods. Throughout my research career I have learned that asking people about what matters in their lives, and how money works for them as a social tool, is far more effective than asking people for numbers.
For example, one technique I have used in various places, including the Netherlands and Haiti, is the “portable kit study”. This method involves asking people to take all their possessions out of their pockets and bags, display them on a table, and talk about each object in turn. Coins, notes, bank cards, receipts, and identification cards were among the money-related objects we were shown. Asking about these objects allowed us to develop a picture of people’s financial behaviours without having confront people directly. We ended up collecting quite detailed information about their incomes, debt obligations, and thoughts about their financial futures without having to ask them outright.
But there are many more ways to do research on money. Many researchers have adapted classic research methods to researching money, or have invented completely new ones. We have written about these in the Consumer Finance Research Methods Toolkit (CFRM Toolkit), an IMTFI / Canela Consulting initiative to hightlight cutting-edge research into consumers’ financial behaviours in the context of fast-changing markets for products and services.
For example, ethnographers are successfully adapting classic methodologies to new settings and research demands. Joseph Kaye and his colleagues used a financial tour method in the USA to build up a picture of households’ finances. They used innovative techniques including home tours to see where people kept finance-related objects (such as bills stuck on the fridge), asked people to draw maps of where their financial transactions took place, and looked at people’s financial spreadsheets (taking care to hide private information by placing sticky notes on screens).
In another interesting application of ethnography, Tom Boellstorff’s collaborative ethnography in Indonesia shows how people use online and offline money management tools in combination. Combining face-to-face interviews with analysis of the online purchasing and payments environments, they discovered that devices were central to online shopping behaviour in Indonesia, but that people did not always use their electronic devices to complete payment. Why might people choose to deposit a payment via an ATM or cash instead of paying online? The answer was mixed: even when paying online was possible, sometimes it was not preferable due to cost of transactions, security fears, familiarity with technology, or a preference to undertake transactions face-to-face.
Financial diaries are also a great way to find out about finances. Alexandra Mack used an online financial diary method as part of a study of financial communications management in the United States. The entire study took place online, with participants using a program called Revelation to fill out their financial diaries in their own time. Yet Mack maintained a personal connection with her participants, making sure she was available to answer questions and emailing the group daily to stimulate participants’ motivation. She made sure she thanked participants for each diary submission and answered questions quickly. She notes:
“This lets them know that they aren’t communicating into a black hole. Also, the follow-up questions help to get more details and clarify and encourage more engagement and longer answers.”
Mack’s study is a good example of how even an online study—a medium often conceptualized as socially distant—can be adapted to ethnographic techniques. A personal approach to researching money does not necessarily require the co-presence of researchers and participants.
There is a lot that can be done with research methods to capture changing practices in consumer finance globally. While these behavioural changes present challenges for research design, they also provides more launching points for discussions about money, and this can help us to build holistic pictures of the social life of finance. Change is not a research problem, but an opportunity, and this as true of money as any other topic of inquiry.
About the author
Erin is an economic anthropologist with 17 years of fieldwork experience around the world. She is fascinated by financial behaviour in all its guises, from how people use technology in ways its designers didn’t intend, to their emotional experiences of their financial lives.