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THE RICH HISTORY AND BEHAVIORAL SCIENCE OF ROUND UPS

Brian Alderman, Founder/CEO

June 15, 2021

From pirate treasure to scavenging in the couch cushions, coinage has a rich history in our economic systems. IvyCo's Smart Round Ups create a modern twist on the power of spare change to create a big impact for the climate. Together, we can fund critical Carbon Removal and Climate Activism efforts without impacting our budgets by using the power of spare change. In this post, we'll explore the mechanics and history of rounding up spare change and learn about how IvyCo's Smart Round Ups fight climate change automatically with every purchase you make.  

Even pre-pandemic, using cash to buy things was decreasing in popularity. Still, we can all recall the inconvenience of being handed a stack of coins as change. They'd rattle around in your wallet or pocket until, eventually, you'd dump them into a jar or piggy bank at home. When it was full, you would empty out that piggy bank and take all the coins to the bank or to a Coinstar machine. Do you remember being surprised at how much money the spare change added up to? According to the US Mint as of 2020 there is $1.17B circulating in our economy, mostly in quarters, so you can see how that spare change can add up quickly.

Such a tangible experience with coins is less common in the era of digital payments, but spare change lives on and can continue to have a surprising impact through Round Up technology. Instead of you bringing the change home and putting it in a jar to then spend later, checkout lines, websites, and stores will collect it for you. For example, if your total when checking out at the grocery store is $65.43 then you have probably been asked if you want to round up to $66.00 to raise $0.57 for a local non-profit. Imagine how many times in a month people say yes when asked - my local food coop usually raises a significant $2,000 per month for local organizations using round ups. The power of rounding up goes beyond the grocery store. There are apps that connect to your debit card and raise millions of dollars by rounding up your spare change for non profits. You may also have heard about or used Acorns, an app that helps round up your purchases to build retirement savings.

Infographic of Round Ups

So why are seemingly small Round Ups successful at making large impacts? Part of the answer lies within a few principles of behavioral economics. One of these ideas is that small amounts are easier to contribute than large amounts. It feels like less of an impact to your lifestyle to contribute a few cents each day compared with $100 each year, even if over the course of the year you contribute $100 either way. This is sometimes called the 'Less Is Better' effect, where when presented with a choice we prefer the smaller dollar amount regardless of actual value over time.

Another key insight from behavioral economics that makes rounding up with IvyCo powerful is the fact that automatic actions are easier than making decisions each time. This is the concept of a default option. If you're asked with every purchase if you want to round up for the climate, you're less likely to do so than if rounding up happens automatically every time. When you use IvyCo, every purchase you make is analyzed, and round ups are applied, so you don't need to think about checking the "green" box in your online shopping cart.

IvyCo's Smart Round Ups are designed to create a significant impact for the climate using our small change. Since IvyCo uses open banking technology to securely connect to your bank accounts and credit cards that you use everyday, we can round up across your full financial life. Even though IvyCo is automatic, you always remain in control - you can set a budget each month that IvyCo will never exceed. Uniquely, IvyCo also ties the climate impact of your purchase to the size of the round up - the most carbon intense purchases (for instance, flying) will round up more (to the nearest $5 for example). This creates a feedback loop, helping reinforce your understanding of the climate impact of your spending.

As Treasury Secretary Janet Yellen testified recently to Congress, the penny - and more generally coinage in our financial system - is here to stay. Together, IvyCo users have raised over $1000 for the climate this year with their spare change.  Sign up for IvyCo today to join us in making an impact with your spare change, and watch IvyCo's Impact Dashboard to see the impact we're having together.

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