UM17-13 - Behavioral Factors and Long-run Financial Well-beingVictor Stango, Joanne Yoong and Jonathan Zinman
Understanding the prevalence and predictive power of behavioral factors—deviations from classical economic preferences, beliefs, and decision rules—in savings and retirement decisions is critical to understanding what products and policies will best foster long-term financial well-being. The authors propose low-cost techniques for eliciting a rich suite of individual-level behavioral factors, and implement these methods in a large, representative U.S. survey. These new and rich data permit answers to some long-standing questions: • Which behavioral factors are most prevalent among U.S. individuals/households? • Of those factors, which are most important in determining retirement savings, wealth accumulation, and long-term financial well-being? • What new products/services and/or policy tools will most effectively foster retirement preparedness and financial well-being, given the results of the first two questions? Answers will help policymakers design products and communicate information in ways that improve decision-making associated with savings and retirement planning.