The Astounding Payday Effect on Kickstarter

13 February 2020 | 14 Comments

Does your paycheck impact your spending habits?

This is a question I posed to researcher Jun Yang a few months ago. Jun and her coauthors have been studying millions of data points from Kickstarter as they prepare a paper focusing on some statistical anomalies. Jun works at Indiana University, but she’s visiting Washington University in St. Louis this semester, so we’ve been chatting about Kickstarter, creators, and backers.

Back in my Kickstarter days I had some discussions about the “payday effect,” the idea that people feel wealthier than normal–and are more likely to spend money–on days when they receive their paycheck (or see it deposited in their bank account). I theorized this might apply to Kickstarter backers, and I asked Jun if we could look at her data.

The results were even more pronounced than I thought. Let’s start with the first chart, which shows the day of the month that projects launched across all categories. The vertical orange bars show the total number of projects, and the grey trendline shows the success rate.

The biggest data point that stands out to me here is the success rate of projects launched on the first of the month (the day when many people get paid) compared to other days. Launch day in general is critical to a Kickstarter project’s success, so it would seem that you want to select a launch day when people are the most psychologically eager to spend money (even though the funds aren’t actually charged to them until the end of the project).

The second chart is a little weirder. The data shown here is the same as the previous chart, except that the trendline is the pledge ratio (how much a project overfunds). While the first of the month is still one of the best days, there’s also a big spike on projects launched in the middle of the month, particularly the 19th. It’s possible this data is more related to the funding goals selected by backers than to the launch day.

As with my other observations and advice about timing, I think it’s best for each creator to pick the launch day that works best for their particular project and audience. But if you’re debating between a few days near the end/beginning of the month, the payday effect seems to indicate that the 1st of the month is the best day to launch.

What do you think?

Thanks to Jun Yang, Jinglin Jiang, Li Liao, Regan Stevenson, and Zhengwei Wang of Indiana University and Tsinghua University for working on this paper (“Round Funding Period Heuristics and Kickstarter Campaign Success) and for sharing the results! I look forward to posting more data like this in the future.

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14 Comments on “The Astounding Payday Effect on Kickstarter

  1. I wonder if there is a correlation between the quality of a Kickstarter Project and the day they are launched. If one had enough forethought to launch their project on a specific day instead of a random day, they might also be more likely to have planned other things better and thus be more likely to fund. The trouble is objectively measuring the quality of a project.

    1. As you have the Data already it might be interesting to get charts with: Day of the month and weekday compared to how succsessful they where
      Maybe 1st Tuesdays are waaaay more successful thanfor example 1st Mondays.
      or maybe 1st Tuesdays are same successful as 19th Tuesdays.

  2. I would like to see one analysing monthly data. Particularly, projects that launch during Jan-May versus the rest of the year. Personally, I looked back and I noticed I backed a lot of KS, most at the all-in-level during that time frame while I barely backed any from Oct-Nov and if I did, I eventually either dropped the pledge or cancelled it if it didn’t have the $1 option (If I didn’t drop it, it was something I knew I wanted no doubts about it). This is so because I’m getting my credit card rewards check mailed out and I’m getting my tax refund as well during the beginning of the year. So, there is a higher than normal cash flow. On the other hand, my Kickstarter backing habits drop during Oct-Dec because my budget shifts to gift purchases and holiday activities, maybe travel.

  3. I always think about my pay checks when I’m a backer, even if the money isn’t coming out for another 20 days or whatever, I still need to have it so I can budget it and make sure it will be there to spend.
    I think pay checks are one of the trickiest things to balance for some of the shorter campaigns, making sure that you don’t cut out people who otherwise would back, because they don’t get paid until the middle or end of the month or whatever.

  4. Interesting. I’ve heard others talk about this payday effect and its relation to Kickstarter.

    I was under the impression that most people were paid every 2 weeks, so paydays would change on a monthly basis. The data does show, however, that launching on the first of the month may give you some advantage.

    It’s funny how the actual payment when you back a campaign doesn’t come out of your bank account until after the campaign has funded, but there is a psychological effect of knowing the money is in your account when you back (even if it might not be when you actually have to pay for game…

    1. Concur. A lot of US companies used to pay the 1at and 15th. There’s been a steady trend of business moving to a rolling two week paycheck. And some of the employers pay Thursday not Friday.

  5. From my experience, in UK most get paid monthly, but would be towards the end of the month, around the 25th to 27th.

    I have not backed stuff before now because of short Kickstarters, that have not gone over a payday. Like Kanban EV’s to short and middle of the month. Luckily I knew it was coming.

  6. In Australia (at least, colloquially amongst my friends, some of us get paid monthly at the end of the month (which jibes with your data), and many others get paid on the 15th, so that could explain the middle-of-the-month spike as well, assuming US companies do the same.

  7. Is this monthly pay a US thing? Here in NZ I barely know anyone that gets paid monthly. Most people here on salaries get paid fortnightly.

  8. Fascinating. I was considering launching in the middle of July just to be different and sidestep competition. But it’s hard to argue with this data!

  9. I love looking at data through a statistical lens. I did a quick analysis on the first graph, estimating the values based on the line heights on-screen.

    The day 1 success rate is an outlier by common definitions (the 1.5*IQR (inner quartile range) method and also the >99 percentile method). So, yes, a project released on the first of the month does give you a statistical advantage. I suspect a 7% increase in success rate is also considered practically significant.

    As for the second graph, I’m not sure if the “spike” trend in the middle is statistically justified or only perceived. I have to get back to my real job, so I’ll leave it at that to someone else.

  10. I wonder if there is a correlation between rent and bills. If mortgage and rent is first of the month, and bills are typically mid month, does the higher funding mid month follow the perception of ‘available funds’ once the bills are paid?

    All very interesting, since the money is not charged in this schedule. I wonder how these trend lines compare to Backer drop off rates during a campaign….

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