Economist Shlomo Benartzi discusses the concept of ‘Save More Tomorrow’, a behavioral finance program designed to help individuals overcome the psychological barriers preventing them from saving enough for retirement.
Benartzi delves into the principles of behavioral finance, the challenges of present bias, inertia, and loss aversion, and how the ‘Save More Tomorrow’ program addresses these issues.
Introduction to ‘Save More Tomorrow’
The ‘Save More Tomorrow’ program, introduced by Shlomo Benartzi, leverages behavioral finance to aid people in saving more for their retirement.
It addresses the common problem of present bias, where individuals prioritize immediate gratification over long-term savings, and inertia, where people procrastinate or avoid making decisions that require effort.
We think we’re going to eat bananas next week. We think we’re going to save more next year. – Shlomo Benartzi
Understanding behavioral finance
Behavioral finance is an interdisciplinary field that combines psychology and economics to comprehend the financial mistakes people often make.
It helps us understand why individuals struggle with saving money and how they can overcome these challenges.
