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Allianz Global Investors Presents | November 2011

Save More Tomorrow

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Professor Shlomo Benartzi and Professor Richard Thaler on “Save More Tomorrow”

Bloomberg Interview with Professor Shlomo Benartzi, UCLA Anderson School of Management, and Professor Richard Thaler, University of Chicago Booth School of Business on how Behavioral Finance can help investors to be better prepared in the future. They introduce their findings from the renown “Save More Tomorrow “ model for retirement savings.

Allianz Global Investors present: Behavioral Finance “Save More Tomorrow”

Narrator:

With recent market downturns some investors realized they are not saving enough. Can Behavioral Finance help them be better prepared in the future?

Shlomo Benartzi
Professor, UCLA Anderson School of Management
Chief Behavioral Economist, Allianz Global Investors Center for Behavioral Finance

Think of the Behavioral Finance toolbox as taking - in a sense - behavioral challenges and flipping them into behavioral solutions. So changing the design of a 401(k) plan to make it easier for people to be saving for retirement - you can think of that, really, as a behavioral tool - part of the behavioral toolbox

Richard H. Thaler
Ralph and Dorothy Keller Distinguished Service Professor of Behavioral Science and Economics, University of Chicago Booth School of Business
Academic Advisor, Allianz Global Investors Center for Behavioral Finance

Shlomo Benartzi and I have devised something called ‘Save More Tomorrow’: you give people the option to commit themselves now to saving more later, because we all have more self-control in the future. So if you get a 4 percent pay increase, maybe you increase your saving by 2 percent, in that way people never see their paychecks shrink.

Shlomo Benartzi
Professor, UCLA Anderson School of Management
Chief Behavioral Economist, Allianz Global Investors Center for Behavioral Finance

Most people tell you they would like to save more, they don’t know how. So what we offer people is the ability to sign-up today to save more in the future. If you look at the first case study, people quadruplet their saving rates from 3.5 percent to almost 14 percent over 3 ½ years.

Narrator:

Prepare for tomorrow by getting actionable insights today – Allianz Global Investors.

Disclaimer:
This video is provided for informational purposes only and should not be construed as an offer or endorsement by Allianz Global Investors. The information and opinions expressed in this material are those of the speaker and not necessary those of Allianz Global Investors. The participation of people and organizations in the video is not an endorsement of their activities or positions by Allianz Global Investors. Allianz Global Investors does not guarantee the accuracy or completeness of such data/information and will not accept any liability for any direct or consequential losses arising from its use.