In my work as a behavioral economist, I’ve thought a lot about how nudges can drive lasting behavior change. In the domain of retirement savings, Nobel laureate Richard Thaler and I devised a program called Save More Tomorrow back in the mid-1990s that used nudges to help people make better decisions about their long-term financial future. That program invites employees to gradually increase their savings rate over time, and it has been a success: according to my latest estimates, it has boosted the savings rates of as many as 15 million Americans.
How Digital Tools and Behavioral Economics Will Save Retirement
Nudging at scale.
December 07, 2017
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Summary.
Nudges can drive lasting behavior change. Digital nudging holds particular promise in the domain of retirement savings. The digital space allows for faster research, as we test out multiple designs to see which one works best. Instead of waiting years to see if an intervention is effective, we can often get results in days or weeks. Second, the digital world offers unprecedented scale: by fixing a single website or app, we can potentially help millions of people make better financial decisions. New research is uncovering even more about how these digital nudges can be used to help people save more money and plan for retirement, including around the power of a framing email; the influence of different dollar amounts in how we make decisions; and the power of just-in-time feedback delivered on a mobile device.