Works
- Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving, Journal of Political Economy, 2004
In Tactics of Organizational Politics
Ideas
Committing now to act later. In the Save More Tomorrow program, employees agree in advance to put part of their future pay raises into retirement saving, so take-home pay never falls. In the first implementation, 78 percent of those offered the plan joined, 80 percent of them stayed through the fourth raise, and average saving rates rose from 3.5 percent to 13.6 percent over 40 months. Caveat: The U.S. Department of Labor's Clearinghouse for Labor Evaluation and Research rated the study's causal evidence low, because the comparison of participants and nonparticipants used no statistical controls.
What it explains
Benartzi and Thaler explain why people agree more readily to a change that starts later and costs them nothing visible today. A commitment made in advance, with the cost deferred, avoids the felt loss that blocks the same change made now.