Testing the Effectiveness of a Future Selves Intervention for Increasing Retirement Saving: Evidence from a Field Experiment in Mexico

Abstract

One psychological barrier impeding saving behavior is the inability to fully empathize with one’s future self. Future self interventions have improved savings by helping people overcome this obstacle. Despite the promise of such interventions, previous research has focused predominantly on hypothetical contexts and western settings where the target sample has been predominantly undergraduate. Do interventions that encourage people to more concretely consider their future selves during retirement still have a positive effect on behavior in consequential, real-world savings decisions? Using a field experiment in Mexico (N = 7,603), where less than 1% make a voluntary savings contribution annually, we developed a low-cost, easy-to-implement intervention to test whether concrete thinking about one’s future life improves recurring retirement savings signups relative to a status quo, control group. We find that future self decision aids significantly improved the likelihood of signing up for an automatic recurring savings plan by nearly four times compared to the control.

Combining nudges and boosts to increase precautionary saving: A large-scale field experiment

“…Field trials support this mechanism, showing that encouraging workers to consider their future-self can increase pension contribution rates (Bryan & Hershfield, 2013;Shah, Hershfield, Munguia Gomez & Fishbane, 2022).…”

“…As outlined in Section 1.1, few studies have aimed to motivate saving. Two exceptions are recent tests of (1) reducing the psychological distance between the consumer's current and future self on saving for retirement (Shah et al, 2022) and (2) a social norm nudge to encourage saving (Dur et al, 2021). We did not seek to test these treatments.…”

“…This intervention also posed practical difficulties. It would not have been feasible to digitally render images of all the bank's customers (Hershfield et al, 2011), or to have all customers complete stories about their envisioned future (Shah et al, 2022). The social norm treatment had a preciselyestimated null effect (Dur et al, 2021) and, moreover, research on peer information and saving for retirements suggests possible backfire effects (Beshears, Choi, Laibson, Madrian & Milkman, 2015).…”

Attention influences emotion, judgment, and decision making to explain mental simulation.

“…Research on mental simulation has, for example, demonstrated that simulating future events can make them seem more vivid, fluent, and prominent (Kappes & Morewedge, 2016; Mrkva, Travers, & Van Boven, 2018). Mentally simulating the distant future can increase how much people prioritize saving for retirement (Hershfield, John, & Reiff, 2018) and other long-term goals (Rutchick, Slepian, Reyes, Pleskus, & Hershfield, 2018; Shah, Hershfield, Gomez, & Fertig, 2018). Mentally simulating risks can make them seem more severe and more likely to occur, especially if the risks are easy to imagine (Gregory, Cialdini, & Carpenter, 1982; Mevissen, Meertens, Ruiter, Feenstra, & Schaalma, 2009; Sherman, Cialdini, Schwartzman, & Reynolds, 1985).…”