November 2022
04Nov

Too much choice counterproductive in retirement systems, new report finds

Giving pension savers the freedom to choose their own investments is beneficial, but including too much choice in a national pension system is counterproductive, according to a new report assessing different retirement frameworks. In the white paper produced by US financial services firm Morningstar – An Evaluation of Retirement Systems Around the World – analysts reach a number of conclusions, saying some countries are better than others at limiting choice; that auto-enrolment programmes are effective and that efforts to engage...

November 4, 2022
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October 2022
07Oct

Disconnected: Reality vs. Perception in Retirement Planning

By Martha Deevy & Steve Vernon This report examines potential interventions and messaging that can help pre-retirees and retirees plan ahead regarding important retirement decisions. The widespread lack of forward-looking planning has vexed retirement planners and researchers for many years. Many problems in later years could have been prevented with planning ahead. Too many people put off making important decisions, only to find themselves later in a serious crisis with limited options. Our research identified interventions and messaging that could be used by...

October 7, 2022
Books, Books, Pension design, Savings, , , ,
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07Oct

Investors’ Activity in Response to Information About Their Pensions

By Amedeus Malisa This paper uses individual-level data on fund choices in the Swedish Premium Pension to analyze how investors respond to information about their pension savings. The Swedish Pensions Agency mails an annual information letter, the Orange Envelope, to investors to provide them with tailored information about their public pension accounts. This paper examines the effect of pension communication in the Swedish Premium Pension System (PPS) by exploiting the staggered roll-out of these letters across different Swedish counties. Results...

October 7, 2022
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September 2022
30Sep

Nudges and Networks: How to Use Behavioural Economics to Improve the Life Cycle Savings-Consumption Balance

By David Blake Many people find it difficult to start and maintain a retirement savings plan. We show how nudges can be used both to encourage people to save enough to provide an acceptable standard of living in retirement and to draw down their accumulated pension fund to maximize retirement spending, without the risk of either running out of money or leaving unintended bequests. Networks can help too, particularly employer-based networks. However, the nudges and networks are more likely to...

September 30, 2022
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30Sep

Behavioral Influences on Retirement Planning: Non-Financial Reasoning Affecting Retirement Outcomes

By Janet Aschkenasy The supposed rational logic of the market is no longer understood to exclusively motivate economic decision making. Behavioral economics is now a vital part of university curriculums. Both lay persons and professional retirement investors at times manage money on irrational behavioral factors. Janet Aschkenasy, a veteran business writer, discusses the insights of leading behavioral economics scholars and draws upon current research to describe "decision making" practices among individuals and retirement managers. Often higher investment returns are forfeited to a behavioral...

September 30, 2022
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14Sep

Financial Wellness Meets Behavioral Economics

By Shlomo Benartzi Helping Participants See the Big Picture and Act on It The financial lives of American workers have become increasingly complicated in the 21st century. Instead of relying on an employer pension, most workers now save on their own, a shift that brings both opportunities and challenges. In addition, workers have to effectively allocate these savings across different financial products and accounts. Should they fund their 401(k) account or emergency savings account? Should they choose a high-deductible health...

September 14, 2022
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14Sep

Choice Overload? Participation and Asset Allocation in French Employer-Sponsored Saving Plans

By Marie Briere, James M. Poterba & Ariane Szafarz This paper employs administrative data from one of the largest plan providers in France to investigate the role of plan and default characteristics in affecting whether employees participate in the plan and whether they accept its default investment option. The dataset includes information on the saving choices of 680,392 active employees at 1,610 firms. French employers have wide discretion in structuring employee saving plans. All plans must offer medium-term investments, which...

September 14, 2022
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02Sep

A Behaviorally Informed Financial Education Program for the Financially Vulnerable: Design and Effectiveness

By Ernst-Jan de Bruijn, Gerrit Antonides, Tamara Madern Financially vulnerable consumers are often associated with suboptimal financial behaviors. Evaluated financial education programs so far show difficulties to effectively reach this target population. In our attempt to solve this problem, we built a behaviorally informed financial education program incorporating insights from both motivational and behavioral change theories. In a quasi-experimental field study among Dutch financially vulnerable people, we compared this program with both a control group and a traditional program group....

September 2, 2022
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August 2022
19Aug

A Game-Theoretic Model of the Consumer Behavior under Pay-What-You-Want Pricing Strategy

By Vahid Ashrafimoghari & Jordan W. Suchow In a digital age where companies face rapid changes in technology, consumer trends, and business environments, there is a critical need for continual revision of the business model in response to disruptive innovation. A pillar of innovation in business practices is the adoption of novel pricing schemes, such as Pay-What-You-Want (PWYW). In this paper, we employed game theory and behavioral economics to model consumers’ behavior in response to a PWYW pricing strategy where...

August 19, 2022
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July 2022
22Jul

The Effects of Myopia on Retirement Savings Decisions

By Justin van de Ven Recent pensions policy debate in the United Kingdom has emphasised the role of behavioural myopia in justifying state involvement in retirement provisions (e.g. Pensions Commission, 2005, pp. 68-69, and op.cit.). In this regard, it appears that the public debate has gotten slightly ahead of the economic literature, as there currently exist very few studies that consider the empirical support for myopia on field data, or the practical implications of myopia for behavioural responses to policy...

July 22, 2022
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