How Do Emotions Influence Saving Behavior?

Deborah J. MacInnisGergana Y. Nenkov Maureen Morrin

IB#9-8

The brief’s key findings are:

  • A recent experiment tested how retirement saving is affected by two emotions:
    • hope (the degree of yearning for a secure retirement); and
    • hopefulness (the perceived likelihood of a secure retirement).
  • The experiment “threatened” these emotions by telling some participants that the chances of a secure retirement were worse than expected.
  • Responses to the threat differed; compared to the relevant control group,
    • those with high hope shifted their hypothetical portfolio toward equities.
    • those with high hopefulness were more likely to join a hypothetical plan.
    • those with low hopefulness were less likely to join a plan.
  • These behavioral responses suggest that communication about retirement saving needs to be tailored to the characteristics of the individual.