Choosing Today for Tomorrow: The Insurance Agent’s Influence Over the Choice of Pension Savings Track

20 Pages Posted: 8 Mar 2016

See all articles by David Leiser

David Leiser

Dept. of Psychology - Ben Gurion University of the Negev

Avia Spivak

Ben-Gurion University of the Negev - Department of Economics

Eyal Carmel

Ben-Gurion University of the Negev

Date Written: February 2016

Abstract

Choosing a retirement plan is one of the most important economic decisions people make in their lifetime. Under Israel’s pension marketing policy, a pension plan is generally chosen at a meeting with an insurance agent, who may be subject to a conflict of interests. In this study, 263 participants were asked to choose a savings plan after meeting with an insurance agent who provided information about two different plans and then proceeded to recommend one of them. The study examined whether the tendency to choose a particular plan is related to the insurance agent’s recommendation, to the fair disclosure statement provided by the agent and the decision maker’s degree of financial literacy. It was found that the agent’s recommendation had a decisive effect which was not offset by fair disclosure. Furthermore, it was found that the agent’s influence was moderated by a high degree of financial literacy when managers’ insurance was recommended. Yet, the agent’s recommendation remained significant, as expressed in the intention to choose a different plan from the one chosen by a control group that did not meet with the agent. The results of the study indicate that the insurance agent exerts considerable influence, and they confirm that transparency and knowledge do not counterbalance the insurance agent’s strong influence over the recipients of the advice. This influence may be abused when the interests of the agent and the consumer are not aligned.

Suggested Citation

Leiser, David and Spivak, Avia and Carmel, Eyal, Choosing Today for Tomorrow: The Insurance Agent’s Influence Over the Choice of Pension Savings Track (February 2016). Israel Economic Review, Vol. 13, No. 1, 2016. Available at SSRN: https://ssrn.com/abstract=2742777

David Leiser (Contact Author)

Dept. of Psychology - Ben Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

HOME PAGE: http://www.bgu.ac.il/~dleiser

Avia Spivak

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel

Eyal Carmel

Ben-Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

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