How Do Emotions Influence Saving Behavior?

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.