Reducing Savings Gaps Through Pennies Versus Percent Framing

36 Pages Posted: 2 Apr 2022

See all articles by Stephen Shu

Stephen Shu

Cornell University

Hal Hershfield

University of California, Los Angeles (UCLA) - Marketing Area

Richard Mason

City University London

Shlomo Benartzi

UCLA Anderson

Date Written: January 12, 2022


Many companies and policymakers would like to reduce retirement savings gaps between ethnicities, gender, and income bands. Choice architecture, such as automatic enrollment, is one tool to help reduce such gaps. Yet not all employers want automatic features. This raises the question whether information architecture tools can be an additional tool to promote equality in saving. In this paper, we investigate an alternative to employees deciding what percent of pay they wish to save. Percentages are abstract, and evidence suggests that using them affects the judgments of less numerate consumers in other contexts, such as the health domain. Here, we examine the impact of using percentages to show savings rates, finding that they may lead to less desirable outcomes for some subpopulations (e.g., those with lower income who may be less financially literate or less numerate). We then introduce a new information architecture tool meant to help these segments: a pennies reframing of savings rates. A randomized controlled trial including 2,255 participants across eighty-six employers was conducted with participants assigned to either a pennies or percent treatment for making retirement savings elections. For those who submitted a savings rate, pennies framing had a positive impact on savings rates and reduced gaps between those with lower and higher income. The effects were largest for those with lower salaries (a proxy for numeracy), and those in the lowest salary tercile (annual income less than $46,000) elevated their savings rates by approximately 115 basis points compared to a control savings rate of 6.88%. Floodlight analysis suggests that those with less than $50,000 in annual salary are those most helped by pennies reframing. Pennies reframing can serve as a powerful information architecture tool for reducing gaps between the haves and have nots and democratizing savings.

Keywords: choice architecture, behavioral economics, saving, financial decisions

JEL Classification: D03, D11

Suggested Citation

Shu, Stephen and Hershfield, Hal and Mason, Richard and Benartzi, Shlomo, Reducing Savings Gaps Through Pennies Versus Percent Framing (January 12, 2022). Available at SSRN: or

Stephen Shu (Contact Author)

Cornell University ( email )

Ithaca, NY 14853
United States

Hal Hershfield

University of California, Los Angeles (UCLA) - Marketing Area ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Richard Mason

City University London ( email )

Northampton Square
London, EC1V 0HB
United Kingdom

Shlomo Benartzi

UCLA Anderson ( email )

365 24th Street
Santa Monica, CA 90402
United States

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