Why saving is hard, and the one change that fixes it.
What kind of saving is this?
Why this works.+
Saving asks you to act over and over, and everything else in your month is asking too.
What happens when you do nothing decides most of it.
Whatever happens when you do not act is what will usually happen.
37% → 86%
How many new hires ended up in the 401(k) once joining became the default.
+How one company doubled its savers
Same company, same paycheques, same people. The form flipped from opt in to opt out, and participation more than doubled. Your card is a default you set for yourself.
Money with a name on it gets kept.
An envelope with a name on it is money you have already decided about.
Write the rule, not the intention.
An intention is you, later, deciding again. A rule is a sentence you settle once, on the day the money is already moving.
Where these numbers come from
Madrian & Shea (2001)
401(k) participation went from 37.4% to 85.9% once enrollment was automatic. Nobody was forced; the default changed.
Read the paperBeshears, Choi, Laibson & Madrian (2018)
Leakage — loans and withdrawals — offsets roughly 40% of the potential gain.
Read the paper
If you want to go further: Nudge, Thaler & Sunstein.