Can Making Family Salient Increase Retirement Savings? Evidence from a Large-Scale Field Experiment

56 Pages Posted: 4 Oct 2019 Last revised: 12 Nov 2020

See all articles by Avni Shah

Avni Shah

University of Toronto at Scarborough - Division of Management; University of Toronto - Rotman School of Management

Matthew Osborne

University of Toronto at Mississauga - Department of Management

Jaclyn Lefkowitz

ideas42

Alissa Fishbane

ideas42

Dilip Soman

University of Toronto - Behavioural Economics in Action at Rotman (BEAR)

Date Written: November 12, 2020

Abstract

Many people fail to save for retirement, opting to spend money and consume in the present. Previous work has largely focused on highlighting the long-term benefits that savings can have for the individual. Instead, we test a novel intervention that that frames retirement savings as a way to ‘secure your family’s financial future.’ Using a large-scale field experiment (N=97,149), we find that sending SMS reminders with a family security framing improves contribution rates relative to those in the control group who do not receive an SMS message and other treatment groups who receive SMS reminders based on previously successful behavioral interventions (e.g., basic alerts, pennies-a-day, individual goals, fresh start). Promisingly, contribution rates continue to be higher for those who received the family security SMS even two months following the experiment, despite no other SMS reminders being sent. We combine our analyses with two machine-learning approaches and identify significant heterogeneity in the effectiveness of our treatment. While the family security SMS improves contribution rates by 89% for those over the age of 28, it significantly backfires for younger individuals decreasing contributions by 53%. If the goal is to optimally increase retirement contributions, then accounting for heterogeneity can have clear policy and firm implications. Sending the family security intervention to the entire customer base would decrease the number of contributors, total contribution amounts, and overall firm profits, relative to a segmented approach that sends the intervention only to customers above the age of 28.

Keywords: field experiment, nudging, retirement savings, financial decision-making

JEL Classification: C93, D14, H55, O16, O54

Suggested Citation

Shah, Avni and Osborne, Matthew and Lefkowitz, Jaclyn and Fishbane, Alissa and Soman, Dilip, Can Making Family Salient Increase Retirement Savings? Evidence from a Large-Scale Field Experiment (November 12, 2020). Available at SSRN: https://ssrn.com/abstract=3460722 or http://dx.doi.org/10.2139/ssrn.3460722

Avni Shah

University of Toronto at Scarborough - Division of Management ( email )

1265 Military Trial
Scarborough, Ontario M1C 1A4
Canada

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Matthew Osborne (Contact Author)

University of Toronto at Mississauga - Department of Management ( email )


Canada

Jaclyn Lefkowitz

ideas42 ( email )

80 Broad Street
Suite 3000
New York, NY 10004
United States

Alissa Fishbane

ideas42 ( email )

80 Broad Street
Suite 3000
New York, NY 10004
United States

HOME PAGE: http://www.ideas42.org

Dilip Soman

University of Toronto - Behavioural Economics in Action at Rotman (BEAR) ( email )

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