97 Savings and Procrastinations

Based on research by Thaler, Richard, Benartzi, 2004, written by Juanita N. Baker, Ph. D.

Looking for sound financial advice? Behavioral economics uses psychological principles to help people make better choices with their money, including saving for retirement.

Behavioral scientist and economist Richard Thaler’s University of Chicago study was the driving force behind a program to get workers at a manufacturing company to save more for retirement. One key aspect of the program was to counter procrastination in making an effort to save.  Instead, workers had to opt out, if they didn’t want a salary portion automatically saved for them. Workers that participated in Thaler’s “Save More Tomorrow” program went from saving 3.5% for their retirement accounts to 13% over 3 years. This increase was also made possible by convincing 78% of the workers to commit in advance to allocating a portion of their future salary increases toward retirement savings. This also counters the human tendency to be overly optimistic (that prevents saving) by getting people to commit to saving more for their future.

With compound interest and wise investments, every $1000 more saved per year can make the difference in thousands of dollars more at retirement.

Put in use the same behavioral tendencies – e.g., procrastination – set yourself up so more energy is needed to stop from saving than to save.


Thaler, R. H. & Benartzi, S. (2004). Save More Tomorrow™: Using behavioral economics to increase employee saving. Journal of Political Economy, Vol. 112, No. S1.

For more details see:

American Psychological Association, February 19, 2004


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