Can Small Victories Help Win the War? Evidence from Consumer Debt Management

Abstract

The question of how people should structure goal-directed activity to maximize the likelihood of goal attainment is one of theoretical and practical significance. In particular, should people begin by attempting relatively easy tasks or more difficult ones? How might these differing strategies affect the likelihood of completing the overarching goal? The authors examine this question in the context of an important goal for a large number of consumers—getting out of debt. Using a data set obtained from a debt settlement firm, they find that (1) closing debt accounts is predictive of debt elimination regardless of the dollar balance of the closed accounts, whereas (2) the dollar balance of closed accounts is not predictive of debt elimination when controlling for the fraction of accounts closed. These findings suggest that completing discrete subtasks might motivate consumers to persist in pursuit of a goal. The authors discuss implications for goal pursuit generally and for consumer debt management specifically.

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