Inaction inertia in retirement saving

Job M.T. Krijnen, Marcel Zeelenberg, Seger M. Breugelmans, Marijke van Putten

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

In retirement saving, many people miss out on early opportunities to save and subsequently fail to take adequate actions for a long time thereafter. We examined whether these two observations—the initial failure to act and the subsequent inertia—could be related through the phenomenon of inaction inertia. In Experiment 1 (N = 180), participants were less likely to save for retirement when the difference in annual return between the current opportunity and the missed opportunity was large versus small. In Experiment 2 (N = 180), participants were less likely to start saving for retirement when reminded of a missed opportunity 10 years ago versus 1 year ago. These data constitute the first demonstration of inaction inertia in retirement saving: People's reluctance to act on attractive saving opportunities may be induced by their previous inaction. In Experiment 3 (N = 340) and Experiment 4 (N = 628), we find that the observed inertia is the product of a tendency to underestimate exponential growth combined with a focus on past opportunities. Building on this mechanism, Experiment 5 (N = 916) provided evidence for a potential remedy; the inaction inertia effect completely disappeared when focus was shifted from required contributions to future outcomes.

Original languageEnglish
JournalJournal of Behavioral Decision Making
DOIs
Publication statusAccepted/In press - 1 Jan 2019

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Retirement
retirement
experiment
remedies
Inertia
Retirement saving
Experiment
Growth
evidence

Keywords

  • exponential growth bias
  • inaction inertia
  • inertia
  • missed opportunities
  • retirement saving

Cite this

Krijnen, Job M.T. ; Zeelenberg, Marcel ; Breugelmans, Seger M. ; van Putten, Marijke. / Inaction inertia in retirement saving. In: Journal of Behavioral Decision Making. 2019.
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Inaction inertia in retirement saving. / Krijnen, Job M.T.; Zeelenberg, Marcel; Breugelmans, Seger M.; van Putten, Marijke.

In: Journal of Behavioral Decision Making, 01.01.2019.

Research output: Contribution to JournalArticleAcademicpeer-review

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