Libertarian paternalists and behavioral economists are enthusiastic about the Save More Tomorrow plan, by which employees agree that some portion of their future wage increases will go to savings. Save More Tomorrow helps overcome the two behavioral obstacles of loss aversion and inertia. The plan is making it more likely that many thousands of Americans will have more comfortable retirements.
Those of us who like Save More Tomorrow do not want to require private or public employers to offer the plan. But we hope that it will be made increasingly available as a nudge.
Richard Thaler and I think that it is possible to build on Save More Tomorrow. In Nudge, we observe that many people have strong charitable impulses, and they give less than they might because of inertia. Many of us decide, at one or another time, that we ought to give more, but we fail to do so because time passes and we focus on other things.
A Give More Tomorrow plan might help. The basic idea is to ask people whether they would like to donate a small amount to their favorite charities in the near future, and then agree to increase their donations every year. Such a plan might even be offered through the workplace, in which employers and employees might agree to devote a small percentage of future wage increases to charity. A pilot Give More Tomorrow experiment, conducted by Amy Bremen, has found some exceedingly promising results.
There is a larger point here. Often private and public institutions seek to alter behavior by changing material incentives (sometimes, in the case of government, at taxpayer expense). But the most effective approaches sometimes put material incentives to one side and change what Thaler and I call "choice architecture," which is the background against which people make their decisions. Good choice architects maintain liberty while also making it easy for us, and for what Lincoln called the "better angels" of our nature, to do what we would like to do.
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