We are spending too much today, promising ourselves to start saving tomorrow or the day after tomorrow or in two days. This is because the emotional parts of our brain continually underestimate the future - life is short and we want to have fun now.
The solution to this problem was found by Shlomo Benartzi and Richard Thaler. They created a retirement plan that takes into account our irrationality. Their plan, called Save More Tomorrow, neatly bypasses the limbic system.
Rather than asking people if they want to start saving now - which is a standard practice in any retirement plan - companies that are part of the Save More Tomorrow program ask their employees if they want to join savings plans. which will take effect in a few months.
Since this proposal allows people to make decisions about the future without thinking about possible losses in the present, it safely bypasses the emotional brain prone to impulses.
Preliminary data on this program showed its colossal success: after three years, the average savings rate rose from 3.5% to 13.6%.
Jonah Lehrer
"How we make decisions"
The solution to this problem was found by Shlomo Benartzi and Richard Thaler. They created a retirement plan that takes into account our irrationality. Their plan, called Save More Tomorrow, neatly bypasses the limbic system.
Rather than asking people if they want to start saving now - which is a standard practice in any retirement plan - companies that are part of the Save More Tomorrow program ask their employees if they want to join savings plans. which will take effect in a few months.
Since this proposal allows people to make decisions about the future without thinking about possible losses in the present, it safely bypasses the emotional brain prone to impulses.
Preliminary data on this program showed its colossal success: after three years, the average savings rate rose from 3.5% to 13.6%.
Jonah Lehrer
"How we make decisions"
