Individual heterogeneity and pension choices: How to communicate an effective message?

Giovanni Gallo, Costanza Torricelli and Arthur van Soest (avas@uvt.nl)

Center for the Analysis of Public Policies (CAPP) from Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi"

Abstract: We use the Elaboration Likelihood Model (ELM) to explain how communication influences the heterogeneity in pension choices. To this end we exploit the 2007 Italian reform that allowed transferring future severance pay contributions into a pension fund and was accompanied by an information campaign with a clear message. According to ELM, individuals follow either a “central route” or a “peripheral route” depending on their motivation and ability to think, and eventually change or retain their initial attitude. Based on Logit models and data from the Bank of Italy Survey on Household Income and Wealth, we find that the decision to transfer the severance pay into a pension fund was taken by more educated and older individuals, with high household income. Since the reform was mainly directed at low income and younger individuals, this result suggest that the information campaign was not very effective. Moreover, our findings show that generic financial literacy does not significantly affect decision consciousness, pointing at a more relevant role in the elaboration process for: the individual’s comprehension of the specific choice object (pension funds), cognitive skills, and influential contextual factors (i.e., unions and employer’s pressure).

Keywords: pension choices; Elaboration Likelihood Model; financial literacy (search for similar items in EconPapers)
JEL-codes: D03 D14 (search for similar items in EconPapers)
Pages: pages 28
Date: 2016-03
New Economics Papers: this item is included in nep-age, nep-eur and nep-pke
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Related works:
Working Paper: Individual Heterogeneity and Pension Choices: How to Communicate an Effective Message? (2017)
Working Paper: Individual Heterogeneity and Pension Choices: How to Communicate an Effective Message? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:mod:cappmo:0136

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