Question

How behavioral economics affect consumer saving？ Thanks！

Answer 1

Behavioral economics sheds light on most day-to-day practices, and why we use goods and services the way we do so, why we make certain decisions for ourselves or others and how we decide course of action. It is an incredible lens which exposes our internal biases and decision-making approaches. It's one where we can grasp the limits, motives, triggers and weaknesses of our decisions and actions more thoroughly everything from risk to resource management, strategic dependency or irrationality.

The integration of neuroscience , psychology, microeconomic theory , and social intelligence has created a field that provides insights and underlying assumptions about our interactions and continues to influence us in our daily lives.

Cognitive overload is the paralysis that we all feel when we're overwhelmed by too much information or too many choices to make. A customer facing too many variables in planning a retirement plan , for example, might opt to delay the decision. Financial institutions indeed retailers of any type can help consumers move forward by offering fewer, more relevant choices or grouping options into categories.

Framing allows consumers to make decisions based on how they present information. If a consumer can easily calculate how much savings he needs to fund his post-retirement lifestyle, he provides a point of reference. Their current savings balance is then more than a mere amount. We will frame their success and see more clearly whether they are happy where they are or should be can their savings.

Social influence is analogous to framing, providing meaning for abstract numbers as opposed to others. Understanding that 25 percent of Americans saved more for retirement than you did provides contextual information that makes information about your own savings more relevant.