Case Study

Learnings from the Lab: Can Rules of Thumb Curb Consumption?

In financial education and personal finance circles, budgeting (both tracking expenses and planning how much to spend in a specific category of expenses) is heralded as a way to reduce expenses and focus spending on areas of personal importance. However, from a research perspective, the jury is still out on the benefits of budgeting. It is unclear how successful budgeting is at actually reducing expenses even in the short term, given the behavioral challenges associated with creating and adhering to a budget.

We have partnered with Clarity Money to test personal financial management features, including traditional style budgeting and an alternative form of budgeting based on rules of thumb. Rules of thumb are heuristics that can help people make decisions. For example, we use rules to help us make mealtime decisions, e.g. “Never eat carbs,” or to stay in fashion, e.g. “Don’t wear white after Labor Day.” Rules of thumb are also helpful in the personal financial management space. However, existing research does not provide guidance on how to design rules for optimal adoption and impact.

Behavioral Diagnosis and Key Insights

Based on our data analysis, we selected eating out as a good category for testing weekly rules of thumb. We chose this category due to its frequency and to the amount of spending that occurs relative to categories which have more irregular purchase patterns and a lower proportion of someone’s budget. In addition, our qualitative interviews and auditing of financial education courses suggested that eating out was a category people felt they should cut down on.

We chose a week as our preferred unit of time for testing because we believed, based on findings from our research with Propel, that smaller chunks of time are easier to conceptualize.

We performed a 1,353-person study on Amazon Mechanical Turk to determine the most effective type of rule of thumb for managing weekly eating out. We tested the following rules for both specific establishments and for eating out in general:

  1. Only spend a maximum of $[20] each time you eat out.
  2. Only spend $[40] per week eating out.
  3. Never eat out.
  4. Only eat out [two] times per week.
  5. Only eat out on the weekends.

We found that the number of times per week rule (e.g. “I will eat out only once this week”) generally outperformed the other rules of thumb in terms of how confident people felt that they would follow it, the amount that people said they would save if they followed it, and if they would recommend it.

We also found that more general rules of thumb for the activity (i.e. I will eat out only [two] times per week) generally outperformed rules of thumb based on specific establishments (i.e. I will eat out only [two] times per week at Ted’s Restaurant).


To extend our budgeting work, we partnered with Clarity Money, a personal finance management app. Together, we are running two separate three-condition experiments, one focused on budgeting and one focused on rules of thumb.

In the first three-condition experiment, we are testing the following conditions: an informational control, an overall budget-setting condition, and a category-by-category budget setting condition.

In the second three-condition experiment (within the context of a specific category of spending), we plan on testing: an informational control, an overall category spending challenge (e.g. spend only $40 eating out this week), and a rule of thumb-based challenge (e.g. eat out only twice this week).

aThese experiments will be rolled out in Q2 of 2018 and will include at least 10,000 Clarity users.