Hostname: page-component-77c89778f8-n9wrp Total loading time: 0 Render date: 2024-07-19T12:37:44.985Z Has data issue: false hasContentIssue false

Nudging toward a stable retirement

Published online by Cambridge University Press:  02 May 2018

Charles Kroncke*
Affiliation:
Mount St. Joseph University
*
Correspondence: Charles Kroncke, Department of Business, Mount St. Joseph University, Cincinnati, Ohio. Email: Charles.kroncke@msj.edu
Get access

Abstract

The classical economics perspective is that public policy should be used to allow, not hinder, economic freedom. In some cases it may be possible for government to gently nudge individuals to change their behavior without hindering freedom. One example is a change from the default on pension program enrollment forms from “not contribute” to “contribute.” This is generally viewed as a good nudge that gets people to do what the majority of people view as generally the correct behavior. However, a choice to contribute to a pension fund is not always in the individual’s best interest — thus, it is a nudge, not a mandate. To maintain personal liberty, individuals should be fully informed about the consequences of their choice and the motives of the political authority. Saving for retirement is a complex issue, and pension contribution decisions are often made with little foresight or information. Pension contribution nudges may not always be freedom preserving because of complexity and unintended consequences. The benefits, risks, and limitations of default contribution pension nudges are discussed.

Type
Forum
Copyright
© Association for Politics and the Life Sciences 2018 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Sunstein, C. R., The Ethics of Influence: Government in the Age of Behavioral Science (New York: Cambridge University Press, 2016).Google Scholar
Sunstein, 2016.Google Scholar
Sunstein, 2016.Google Scholar
Sunstein, 2016.Google Scholar
Sunstein, 2016.Google Scholar
Beshears, J., Choi, J., Laibson, D., and Madrian, B., “The importance of default options for retirement savings outcomes: Evidence from the United States,” Working Paper 12009 (Cambridge, MA: National Bureau of Economic Research, 2006).Google Scholar
Sunstein, 2016.Google Scholar