Using narrative decision aids to encourage retirement savings

Background

People are unlikely to save for their future when they are unable to automatically contribute to a retirement savings account through their paycheck. Unfortunately, this is the reality for millions of people who work at small businesses, who have part-time jobs, or who are otherwise excluded from the traditional employer-based retirement savings system. In 2017, Oregon introduced OregonSaves as a way to address this issue. OregonSaves is a retirement savings option for employees in the state who did not have the option to save through their employer.

All employees are automatically given access to the account and they free to opt-out if they choose to do so. Even with automatic enrollment, the OregonSaves program looks to maximize employee participation to ensure the program helps as many people in the state of Oregon to start saving for retirement. We partnered with OregonSaves to explore how we might encourage more employees to start saving with the program.

Key Insights

A lot of work has already been done to understand why people often struggle to save for the future, but we wanted to understand how these barriers might prevent people from doing so within this specific context.

We began by conducting in-depth interviews with individuals in Oregon who would be eligible to enroll. We complemented these interviews by creating a behavior map that documented the timing and format of each interaction the program has with a potential saver. Lastly, we conducted a series of survey-based experiments to understand how people perceived and understood the OregonSaves program. Three barriers emerged as especially relevant:

• Many people who are eligible for OregonsSaves want to feel in control of their money and often aren’t comfortable sacrificing short-term liquidity, even when they could save small amounts.

• Some people are wary of a program managed by the government. This was not the case with everyone we spoke with, but some felt the state had mismanaged other things in the past like state pensions.

• Many people felt torn about enrolling because they would like to save but they aren’t sure if they are able to or if this is the right time to save. People look for cues, especially cues from how other people behave, as to what they should do when they are uncertain or unfamiliar with something.

Experiment

We hypothesized that by providing timely program information that addresses important barriers to enrollment and presents that information as vignettes might shape people’s early impressions of the program and might send an implicit, social recommendation to enroll.

To test this hypothesis, we designed and embedded a decision-aid into the introductory email that is sent to eligible employees. Starting in May, two groups of employees randomly received emails one of two different decision aids while a third group received an email with an informational decision aid.

Results

In total, 10,292 employees received emails as part of the experiment. We tracked whether the participant remained enrolled or chose to opt-out of the program after 30 days. We also examined enrollment patterns across different age groups.

We saw that 78.4% of individuals who received an informational decision aid stayed enrolled in the program. Savers who received either of the experimental decision aids were significantly more likely to remain enrolled in the program, with enrollment increasing to 80.1% and 80.5%. After controlling for age, the difference in enrollment rates among individuals receiving the null recommendation decision aid was marginally significant. Individuals receiving the social proof decision aid were still significantly more likely to participate in the program after 30 days.

While an increase of 1.68% and 2.11% seem relatively small, they still carry dramatic impact. This intervention would encourage more than 100,000 individuals to start saving for their retirement when scaled to the full, eligible population served by OregonSaves.