What makes people decide whether to put money into their workplace retirement accounts?
Sometimes it’s the little things.
“Small Cues Change Savings Choices,” was the focus of a Nov. 7 Financial Literacy Seminar Series (FLSS) presentation delivered at GWSB by James Choi, associate professor of finance at the Yale School of Management.
Choi explained the results of a survey of one company’s employees who’d received emails (in 2009-10) about retirement savings options.
Among its findings, the survey showed that such “randomized savings cues” can lead people, particularly those who’d previously contributed little to their workplace retirement accounts, to change their contributions.
“The cue effects are quite large,” said Choi. “These cues are not just about jogging people out of their inertia. You are actually changing people’s decisions on what the right action is.”
The survey found a 2.9 percent increase in the contribution rate for the group that had previously contributed zero to $2,500 to their retirement accounts after receiving the emails. The cue didn’t make a difference at higher income contribution levels.
The FLSS is a program of GWSB’s Global Financial Literacy Excellence Center (GFLEC). Its academic director is Denit Trust Distinguished Scholar in Economics and Accountancy Annamaria Lusardi.
Among its other efforts to promote financial literacy, GFLEC co-organized an Oct. 31 conference in Paris to address cutting-edge policy issues and research ideas to advance financial literacy around the world.
On Nov. 13, GFLEC is hosting a global financial literacy summit in Amsterdam in collaboration with the World Pension Summit. The summit will gather policy makers, practitioners and other experts for a forum on the rapidly evolving fields of financial literacy, financial education, and financial decision-making.
Speakers will include Lusardi; Fiona Ellis, director of education for pfeg, the United Kingdom’s leading finance education charity; Elsa Fornero, Italy’s former minister of labor, social policies and equal opportunities; and Jean-Paul Servais, chairman of Belgium’s Financial Services and Markets Authority.
Posted by gwsb on November 12, 2013 | Filed under: GWSB News.