In last Sunday’s Times Magazine, Rachel Louise Snyder writes with news of “a network theory for building a savings account.” When John Caskey, an economics professor at Swarthmore, conducted interviews in two low-income communities, he found that many “didn’t save not because they actually couldn’t [i.e. they couldn’t afford to], but because they believed they couldn’t.” The problem was intense social pressure to avoid saving money from friends, family, and other members of people’s social networks: “the minute people got a little surplus, friends and family would start asking for loans.”

What the Consumer Federation of America is doing to reverse this situation is to promote saving using the same network effects that currently impede it by “creating a network of support for saving” by promoting saving to members of churches and community groups. The theory appears to be that if many members of a community save, someone with a surplus will be able to save that money instead of loaning it directly to others. Furthermore, non-savers experience a sort of information cascade as their friends and family start saving, encouraging them to start saving for themselves. When people are able to save their savings victories with each other, it reinforces the accomplishment and promotes even more to save.