The Save More Tomorrow Program and the Household Balance Sheet: A Theoretical Investigation

15 Pages Posted: 17 Jan 2019 Last revised: 9 Sep 2019

Date Written: September 6, 2019


The Save More Tomorrow (SMarT) program of Thaler and Benartzi (2004) has been pointed to as an example of how insights from behavioral finance can be utilized to help households become better prepared for retirement. In this paper we model a representative household that discounts the future hyperbolically and participates in the SMarT program. We provide a "proof of concept" that increased savings contributions from participation in the SMarT program can be offset by other changes to the household balance sheet (i.e., by reductions in other savings assets and/or by increases in debt liabilities), except in the case where the household faces a borrowing constraint that binds. We conclude that it is necessary to assess how the entire household balance sheet is impacted by SMarT program participation in order to properly evaluate the effectiveness of the program at helping households to become better prepared for retirement, given the empirical fact that most households have unused borrowing capacity in an advanced economy like the United States.

Keywords: Household Finance, Save More Tomorrow Program, Saving for Retirement, Quasi-Hyperbolic Discounting

JEL Classification: G51, D14, D15, D91

Suggested Citation

Findley, T. Scott and Cottle Hunt, Erin, The Save More Tomorrow Program and the Household Balance Sheet: A Theoretical Investigation (September 6, 2019). Available at SSRN: or

T. Scott Findley (Contact Author)

Utah State University ( email )

Department of Economics and Finance
3565 Old Main Hill
Logan, UT 84322-3565
United States
+001-435-797-2371 (Phone)


Erin Cottle Hunt

Lafayette College ( email )

Easton, PA 18042
United States

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