From the American Bankers Association, this is a special Valentine's Day episode of the ABA Banking Journal podcast. Welcome back. I'm Evan Sparks. Today's episode is presented with love by R& T Deposit Solutions. And I am delighted to share a classic episode occasioned by a story that came out in the New York Times earlier this week with the headline, "Love and money. Why sharing accounts is good for your relationship.
Fewer couples are combining their bank accounts, but that trend may not promote partners overall financial health." Now if you read through the article, the reporter spends a lot of time talking to a an academic named Jenny Olson. Jenny is an assistant professor of marketing at the Kelley School of Business at Indiana University and she is an expert on the effects a joint account has on couples' well being.
So as we are here in the season of relationships, we actually talked with Jenny about a year and a half ago here on the ABA Banking Journal podcast, and it was such a great episode. I wanted to bring it back to everybody today so that you can get a sense of some of the research on joint accounts and how they affect relationship health and couples' wellbeing. So to all of you out there wishing you a very happy Valentine's Day and enjoy this classic episode of the podcast.
Cause we randomly assigned couples, we can take better steps toward understanding causality. So our results really do suggest that having a joint bank account improves relationship quality
from the American bankers association. This is the ABA banking journal podcast. Welcome back. I'm Evan Sparks. Today's episode is presented by R and T deposit solutions, and we're here to discuss something that you may have thought a lot about, or you may not have thought about at all. So in my case, I've been married for 13 years.
And when my wife and I got married, we just went to the bank and switched to, so I, you know, my wife, she moved all her money over to my account and we switched it into a joint account. And it was a simple piece of paperwork and we were done. And we haven't thought about it much in the past 13 years. It's been a decision that I honestly kind of felt kind of neutral about. It was just seemed like it was the most convenient thing.
For, you know, her to pay her bills, me to pay my bills, us to pay our shared bills out of one account. The interest, there is some new research that has been published in the Journal of Consumer Research that sheds some light on what the effects of how couples structure their finances. are and there are actually some more interesting effects than one that you might actually think. It's not entirely the kind of the neutral decision that I for a long time have thought it was.
And then a lot of people probably think it is. So I'm really delighted that to have as our guest today, Jenny Olson. Jenny is an assistant professor of marketing at the Kelly school of business at Indiana university. And also the off one of the lead author of common sense bank account structure and couples relationship dynamics.
That was recently published in the journal of consumer research So jenny, thank you so much for being on the show and talk telling us a little bit more about your research
Yes, thank you for having me evan and I like that You shared your own story in terms of how you decided to choose your bank account because we were in a similar situation Which is partly where this research came from oddly enough, so my fiance at the time he was very much like Hey, let's go join our account. I remember being like wait No, I like my autonomy. I don't want you to see everything that I'm doing. I like separate accounts.
And, you know, as an academic, I was like, hmm, what does the literature show on this question? And it soon became evident that there wasn't a lot of research on this very fundamental decision that so many people face. And so, that's kind of where this project started and we went from there.
So just to level set, what, what's the current breakdown in terms of how couples structure their joint or separate account status?
Yeah, so there are, there are a few papers out there that look at these descriptive statistics, and I believe that it's around 50 to 60 percent will have completely joint accounts. So it is the, the Favorite option, but there's also a substantial proportion of people that have a blend, so they might have some joints on separate, and I want to say it's about 10 to 15 percent have completely separate.
Okay. All right. So that's, that's interesting and it's certainly something again I, you know, I. I've never thought about this as a contributing factor to, you know, 13 happy years of marriage. But the but I know you were curious about this and you, you and this, your coauthors have put together, put together this really interesting study to examine, you know, what, what, what were you trying to, to evaluate? The, on the effects of couples decisions about how to structure their finances.
Sure. So kind of taking a step back, one of the, the things that we, we found when we were doing a literature review on this question, you know, so again, I went to Scott Rick, who was my dissertation chair at the time, and my co-author on the paper, and I was like, what? What's the best thing to do? Like, what does the literature show? And he said, you know what, it's funny. You bring this up because I've been talking to Deb small and Eli Finkel about this question.
And so we all kind of huddled together and started thinking through this. And there were a few papers that showed a correlation between bank account structure and marital satisfaction. So on average couples who had joint accounts ended to report being happier. And. We thought, well, but that's not causal. Like, is it possible that, you know, our joint accounts making people happier or are happier people simply more likely to join, or is there some third factor that's driving this?
So that really prompted us to look at this in an experimental context. And, and so we knew that we would have to manipulate this variable. And so I can explain the experiment a bit. Yes,
please do. I'd love to like, I think it's great for listeners to have a little sense of the background of the experiment.
Yeah. So what we did, so what we did is we recruited ultimately a total of 230 couples who were either engaged to be married or entering their first marriage. And so we wanted to hold that variable constant Because financial things get a little bit more complex as you add more layers to it. And so everyone started the experiment with separate accounts. So we recruited people who have separate. And then what we did is we randomly assigned them to one of three conditions.
So we said, we want you to keep separate accounts, do not open anything joint, maintain those separate accounts for two years. In the experimental condition, the one that we were really interested in, we randomly assigned another subset of that sample to merge finance. We told them that we want you to discontinue use of your separate accounts, merge accounts, and keep them joint, use them for the next two years.
And then in the no intervention condition, I like to think of this as a choose your own adventure We invited couples to do what they would naturally do like you can manage your finances in any way you want for the next two Years, and so we followed these couples then for two years As they transition to marriage And we surveyed both partners at six different time points because that would help us look at the changes Or their trajectories, you know, are they becoming happier over time?
Are they becoming less happy over time? And what are the differences across those three conditions?
So, so that, that, that's fascinating structure and, you know, about how many couples did you have in, in the experiment total?
We had 230 couples total, and so they were split across the conditions. Now we've over sampled or we over assigned couples to the joint account expecting some attrition because that's the only condition where we invited couples to actively do something.
Okay. That's so. You know, I know, so you're looking here at you're, you're serving them along the way, you're looking at like their happiness and their the degree to which they kind of feel like they're making decisions together. What are, what, what, what are the, what are the specific things? I mean, cause I mean, you know, I, I used to work at an organ at a think tank and there was a scholar there who did research on happiness.
And, and I know that, you know, it's kind of a, it's a, how, how do you measure happiness, et cetera. Right. You know what, What are the specific variables that you were looking for to evaluate whether couples were happier and whether they were, you know, having a greater degree of harmony in their relationship?
It's a very philosophical question. How do we measure happiness? And so what we did is we, we, we created a composite. measure of, we called it relationship quality. So one of those components was relationship satisfaction. So that included questions like, all things considered, how happy are you in your relationship? So very direct. Another one of the components was conflict. So how often are you getting into fights with your partner? You know, yelling or screaming, things like that.
So conflict. And then the third one was something called high maintenance interactions. How difficult or easy is it to talk to your partner? Are the interactions relatively smooth or are they a little bit more volatile? And so we created an index of relationship quality that we measured at six different time points.
So when you, when you look at those three things going into that index, What were the effects of, on the different buckets in the experiment on the, you know, separate accounts, joint accounts, and the no intervention folks?
Yeah, so for the, the key results before I share the key results, one thing I want to mention is that in every longitudinal study of marriage, what we expect to see is a decline in satisfaction over time. So on average, after the wedding day, after the cake is eaten, the dress is worn, the dances are had, people become less happy over time.
And I, you know, kind of joke with my husband about this, of like, you know, because we're in the thick of having children right now, and we're like, our weekends are not going to Costco. Like that, you know, you're doing kind of a little bit more of these mundane realities. And so couples on average become a little bit less happier over time. So that's what we found in couples that were randomly assigned to the no intervention condition. On average, they became less happy.
People that were in the separate condition also, on average, became less happy. However, the couples who were randomly assigned to merge their finances actually were buffered against that decline. So they trended in an upward direction. It was not a significantly, you know, increasing trajectory, but they were buffered against that decline to the extent that at the end of that two year experiment. Couples in the joint account condition were significantly happier than couples in the other.
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How do you describe the, you know, the effect of, how do you describe the effect of the kinds of accounts? Structure that couples chose or, or practiced on, on, on the actual relationship quality versus the other factors that go into it.
Yeah. So because we've randomly assigned couples, we can make, we can take better steps toward understanding causality. So our results really do suggest that having a joint bank account improves relationship quality. Yeah. So it's not necessarily the case that happier couples are more likely to merge. And in fact, we looked at that. So we looked at whether or not there were differences at intake between the people that stayed in the experiment or didn't, were there other variables going on?
And we actually looked at every single. Variable that we collected at baseline and across. I want to say it was over 70 different variables. There was very little evidence of systematic differences. And so it really suggests that it's the bank account structure that's driving the changes.
That's fascinating. So, you know, coming back to thinking about, you know, what what financial planners, wealth planners, bank, you know, personal bankers can, can take home with this conversation. Sounds like, you know, to the extent that bankers are making recommendations about things, this is, this research has direct bearing on how you're going to, on, on, on the, You know, the long term satisfaction of the people that you're advising.
You know, do you have any thoughts on what, what bankers and and wealth planners can do to use this research in terms of how they communicate and make recommendations to their clients?
Absolutely. So, and this is one of the big reasons we wanted to do this work is like actually, you know, what is the recommendation that we offer a new couples who are just starting out and financial service professionals and what our results suggest is that it is a good idea to create joint financial products. You know, products that are designed to involve more than one person. These aren't just individual endeavors, these are joint endeavors.
And a lot of financial decisions are not made independently. They, they tend to be made with another partner. And if couples are happier as a function of this, they're probably more likely to keep coming back, right? To those, to those banking relationships. And so we really advocate for, you know, involving both partners in that financial journey.
Yeah. That's a great, a great, a great thought. The you know, as you look ahead, where are you, what are you thinking in terms of where you'd like to take this kind of research in the future? And what are you you know, what, what are you working on now? I know you said you've been working on this for a decade. What are you working on now in terms of your research interests as a, as a, as an academic?
Yeah, so there are so many different research questions to pursue based upon this. One of the questions that we've been thinking about is understanding the flow of income through these accounts. Like, is it great, you know, maybe it makes more sense to have maybe some separation that then flows into one joint account. How do couples use these accounts? So our results really only speak to the structure itself. We don't know what the conversations were like around it.
These accounts, you know, were people actually happier with how they were managing money as it entered into the account?
I have some work on financial infidelity This is my seat topic, you know Is it possible that financial infidelity is more likely when you have separate accounts because it's easier to hide different expenditures, we I'm also having some work on financial conversations as you likely know and your listeners, you know talking about money is difficult It brings up a lot of childhood feelings and values and you realize that you and your partner might not
be on the same page when it comes to financial goal alignment, for example. And so I have some research suggesting that having a financial conversation with your partner is actually a little less scary than you think it is. And so there's this misprediction. And so we're working on developing interventions to prompt couples to have more fruitful, productive conversations around their finances.
Great. One more, one more question just on, on this and in terms of some of the the research that you're you've done and are, are considering doing. What does the you know, obviously there are a lot of couples who like to specialize within the couple in terms of, you know, who Does dishes who does, you know, takes the kid, the kids to school who does, you know, who pays the bills?
Even within the couples who have joint accounts, did you, did your research get into who within the couple was principally responsible for perhaps managing that joint account or making financial decisions? And does that have any bearing on the research about on the findings about relationship quality?
You know, I love that question. Unfortunately, we don't have any indication on who was the quote chief financial officer of the household. So we're not really sure what was happening, but I do have another paper that was just published where we look at financial decisions within a couple tend to be driven by the couple who has greater subjective financial knowledge. In other words, how couples make decisions might be more a function about confidence versus literacy.
And so we have some indications of that.
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