Overcoming Saving Inertia with Future Commitments
Average Retirement Saving Rate moved from 3.5% to 13.6% — a +10.1 percentage-point (289% relative) change (sample: 3 companies, 1,200 employees).
Study details
- Challenge
- Employees consistently failed to save enough for retirement, even when offered matched contributions, because of immediate consumption desires (present bias) and loss aversion.
- Intervention
- Implemented the 'Save More Tomorrow' (SLaT) protocol: employees commit to allocating a portion of their *future* salary raises to their retirement fund, bypassing current pocket pain.
- Outcome
- Average Retirement Saving Rate: 3.5% (control) → 13.6% (treatment); +10.1 pts, 289% relative
- Sample
- 3 companies, 1,200 employees
- Key takeaway
- Committing future (rather than current) gains to long-term welfare completely disarms loss aversion and present bias, creating sustainable compound savings.
- Biases leveraged
- Present BiasLoss AversionDefault Effect
- Source
- Thaler, R. H., & Benartzi, S. (2004). Save More Tomorrow: Using behavioral economics to increase employee saving. Journal of Political Economy, 112(S1), S164-S187.
Cite this page
Behavioral Economics Lab. "Overcoming Saving Inertia with Future Commitments." Behavioral Economics Lab, https://behavioraleconomicslab.com/findings/save-more-tomorrow.
Primary source: Thaler, R. H., & Benartzi, S. (2004). Save More Tomorrow: Using behavioral economics to increase employee saving. Journal of Political Economy, 112(S1), S164-S187.