The Effect of Attitudes Regarding Retirement on Pension Savings

Ravit Rubinstein-Levi () and Haim Kedar-Levy ()
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Ravit Rubinstein-Levi: Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev, Ben-Gurion Ave 1, Be'er-Sheva, ISRAEL
Haim Kedar-Levy: Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev, Ben-Gurion Ave 1, Be'er-Sheva, ISRAEL

Review of Economics & Finance, 2019, vol. 15, 1-13

Abstract: Changes in most western countries' pension systems have shifted the responsibility for pension savings from governments to individuals. However, individuals are continuing to avoid making decisions regarding their pension savings, partially due to financial illiteracy as well as reluctance to deal with aging. The outcome is wide-ranging poverty among retirees. Improving financial literacy or using the tax system in order to motivate individuals to manage their pension savings more effectively has not provided the desired change due to the complex and dynamic nature of pension systems. We use the theory of conscious balance and Kahneman's theory of "thinking fast and slow" to suggest an alternative approach by studying the way attitudes toward pension and retirement guide individuals¡¯ retirement savings behavior. We empirically identify the relevant attitudes and hypothesize that creating a conceptual change in these attitudes will create a cognitive dissonance that will motivate individuals to improve their pension savings.

Keywords: Attitudes; Decision-making; Pension; Retirement; Savings (search for similar items in EconPapers)
JEL-codes: D14 D91 G28 H55 H75 (search for similar items in EconPapers)
Date: 2019
Note: The authors extend many thanks to anonymous referees of REF, to Moti Amar, Uri Ben Zion, Shmuel Hauser, Jacob Oded, Yoram Kroll, Tal Shavit, and Rami Yosef for their helpful comments. We further thank the participants of the international conference on The Pension Crisis in Israel and the World: Alternatives and Challenges, Ono Academic College, the Israeli Economic Society Conference, and the Finance Research Center seminar series at the Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev for many constructive comments and suggestions.
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