Assistant Professor of Marketing
Department of Management
University of Toronto Mississauga
Abstract
We use evidence from a large-scale field experiment in Mexico (N=97,149) to test the effectiveness of various behavioral interventions on voluntary retirement savings contributions. Specifically, we use SMS reminders to test whether previously successful behavioral interventions (e.g., basic alerts, pennies-a-day, fresh start, individual goal security) or a previously undocumented behavioral intervention-framing retirement savings as a way to ‘secure your family’s financial future’-influences contribution rates in comparison to those who did not receive a text. We found that a family security SMS intervention significantly increased voluntary contribution savings and was more effective than previously used interventions. Using recently developed machine-learning techniques to quantify the heterogeneity in the treatment, we found that women under the age of 29 were nearly 67% less likely to contribute when given this family intervention compared to no intervention at all, while individuals between 29-41 were 68% more likely to contribute, regardless of gender. The heterogeneity in the treatment effects has important managerial implications: We demonstrate that sending this intervention to all account holders would increase profits by $375,800 pesos ($19,032 USD). In contrast, a strategic application of this intervention to profi table individuals only would increase profits by $4,887,000 pesos ($246,000 USD). From a consumer welfare perspective, this strategic application would also generate 4,597 new voluntary retirement contributors (the blanket approach would generate 2,340 new contributors).
Link to paper on SSRN: here
Bio
Matthew Osborne is an Assistant Professor of Marketing in the Department of Management at the University of Toronto Mississauga, with a cross-appointment to the Marketing Area at Rotman. His research interests include the development of modeling techniques to help understand consumer choices and firm behavior. His research has focused on areas such as consumer choice of wireless carriers, consumer learning about new products, and how firms price in markets where transport costs are important. His research papers have been published in journals such as The American Economic Review, Economics Letters, Quantitative Marketing and Economics, and the RAND Journal of Economics.
