Behavioral Economics and Retirement Savings Crisis

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Behavioral Economics and Retirement Savings Crisis

Behavioral Economics and the Retirement Savings Crisis is the title of a new publication by Richard Thaler and Shlomo Benartzi. Benartzi and Thaler is an expert in behavioral economics (or to be more precise behavioral finance). This looks like an interesting paper which was just released on March 8th 2013. Below is a brief excerpt explaining what the research report is about. Jason Zweig (H/T) originally found the report.

Many countries are facing a retirement savings crisis. In the United States, for example, the fraction of workers at risk of having inadequate funds to maintain their lifestyle through retirement is estimated to have increased from 31% to 53% from 1983 to 2010 (1). Roughly half of U.S. employees (78 million) have no access to retirement plans at their workplace (2). Fortunately, there are solutions to these problems. We simply have to change the choice architecture of retirement plans by utilizing the findings of behavioral economics research (3) and make such plans available to all workers. We describe a large-scale field demonstration of the potential impact of such research-based changes in how we save.

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