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The problem of drawing down one’s savings in retirement is known as “decumulation” and is a topic of growing policy importance. This article is devoted to understanding the psychology inherent in decumulation decisions and to identifying policy options that may develop from those findings. We begin by describing key psychological inputs to these decisions, including self-control, temporal discounting, loss aversion, fairness, and psychological ownership. We then briefly review the current evidence testing those processes within particular decumulation domains. Finally, we offer five possible policy approaches for influencing decumulation decisions, including addressing financial literacy, providing defaults, encouraging precommitments, offering disclosures, and building customized decision support systems. These interventions differ according to individuals’ financial sophistication and allow policy makers flexibility in determining the level of support to provide.

Low incomes, limited financial literacy, fraud, and deception are just a few of the many intractable economic and social factors that contribute to the financial difficulties that households face today. Addressing these issues directly is difficult and costly. But poor financial outcomes also result from systematic psychological tendencies, including imperfect optimization, biased judgments and preferences, and susceptibility to influence by the actions and opinions of others. Some of these psychological tendencies and the problems they cause may be countered by policies and interventions that are both low cost and scalable. We detail the ways that these behavioral factors contribute to consumers' financial mistakes and suggest a set of interventions that the federal government, in its dual roles as regulator and employer, could feasibly test or implement to improve household financial outcomes in a variety of domains: retirement, short-term savings, debt management, the take-up of government benefits, and tax optimization.

Geosocial networking phone applications (GSN apps) used to meet sexual partners have become popular in the men who have sex with men (MSM) communities of the USA since 2009. Previous studies have shown greater incidence of gonorrhea and chlamydia and lower testing frequency for HIV testing among GSN app users when compared to non-users. The present study aims to determine the type, number, and frequency of apps used, as well as the association between dispositional self-control and health-related behaviors. Participants (n = 146) were recruited from Amazon's Mechanical Turk program to respond to a brief GSN app marketing survey. Multivariate regression was used to determine differences in app priorities, length of app use, and number of sexual partners between high self-control and low self-control participants. A majority of the participants reported using Grindr (78%) followed by Scruff (19%), Growlr (12%), and Jack'd (12%). Most individuals used one app only (58%), but a significant proportion reported using two apps (28%) or three or more apps (14%). Respondents with low self-control were more likely to report a higher number of hours using GSN apps and a higher number of sexual partners, controlling for race/ethnicity, education, employment, and HIV status. Given the popularity of this burgeoning communication medium, these findings have important implications for developing prevention resources for different segments of GSN app users.

Life annuities can be a valuable component of the decumulation stage of wealth during retirement. While economists argue that most retirees should annuitize, actual demand in the marketplace is low. We analyze data from two studies to determine how measurable individual differences among consumers affect their interest in annuities. We find that a relatively high percentage of respondents dislike all annuities. Demographic factors are not predictive of which individuals dislike annuities, and individual factors predicted by economic models to be important (such as beneficiaries) have small or even opposite effects. The strongest individual differences we measured that predicts liking of annuities is the respondent’s perception of product fairness. We discuss implications of our findings for financial planners hoping to help their customers with these decumulation challenges.

We examine how perceived similarity between sequential risks affects individuals' risk-taking intentions. Specifically, in six studies we find that in sequential choice settings individuals exhibit significant positive state dependence in risk-taking preferences, such that they are more likely to take a risk when it is similar to a previously taken risk than when it is dissimilar. For example, if an individual has previously taken a health/safety risk, that individual is more likely to take a second health/safety risk than a second risk that is in the financial domain. Since similarity between risks is malleable and can be determined by situational and contextual variables, we show that we can change subsequent risk-taking intentions in a predictable manner by manipulating similarity through framing. Finally, we establish that increased feelings of self-efficacy and self-signaling through the prior risk-taking experience drive state dependent risk-taking preferences. We further show that the effe...

Policy makers have long intuitively realized the benefit of encouraging strong psychological ownership toward social programs. For example, Franklin D. Roosevelt in the 1930s purposely designed the Social Security program to include a high feeling of ownership by workers, to generate a sense of responsibility and protection from future legislation. Recent research suggests that this sense of ownership continues to be an important part of the SSA program and is a significant predictor of when retirees claim their benefits. Strong feelings of ownership also exist for other programs (e.g., Medicare) and financial services (e.g., investments), and there are significant implications of that psychological ownership on consumers’ decisions and behavior around these programs. Policy makers and marketers may wish to consider the role of interventions that affect consumers’ psychological ownership, along with feelings of trust and fairness, for such products.

How many positive claims should firms use to produce the most positive impression of a product or service? This article posits that when consumers know that the message source has a persuasion motive, the optimal number of positive claims is three. Increasing the number of claims improves consumer perceptions until the fourth claim, at which point consumers’ persuasion knowledge causes them to view all the claims with skepticism. The studies herein establish and explore this pattern, which the authors refer to as the “charm of three.” An initial experiment indicates that impressions peak at three claims for sources with a persuasion motive but not for sources without a persuasion motive. The second experiment indicates that this effect occurs for attitudes and impressions and that increased skepticism at four or more claims explains the effect. Two final experiments examine the mental process by which the charm of three occurs by investigating how cognitive load and sequential claims influence the effect.

Life expectations are essential inputs for many important personal decisions. We propose that longevity beliefs are responses constructed at the time of judgment, subject to irrelevant task and context factors, and leading to predictable biases. Specifically, we examine whether life expectancy is affected by the framing of expectations questions as either live-to or die-by, as well as by factors that actually affect longevity such as age, gender, and self-reported health. We find that individuals in a live-to frame report significantly higher chances of being alive at ages 55 through 95 than people in a corresponding die-by frame. Estimated mean life expectancies across three studies and 2300 respondents were 7.38 to 9.17 years longer when solicited in a live-to frame. We are additionally able to show how this framing works on a process level and how it affects preference for life annuities. Implications for models of financial decision making are discussed.

The use of scarcity and reference price techniques in 13,594 retail newspaper display advertisements across four major U.S. cities was evaluated in terms of frequency and usage strategies using framing and information‐processing perspectives. One or both of these techniques were found in 22.4% of the ads. Scarcity was used more frequently than reference pricing, and was strongly associated with the use of reference pricing. Limited time availability was found to dominate the use of scarcity tactics. Scarcity and reference pricing were also strongly associated with the use of other attention and persuasion tactics, such as color ads, larger ads, and “Sale” announcements. Given the extensive use of reference pricing and scarcity appeals, their association with each other, and their further association with other commonly recognized advertising tactics, additional research on the use of multiple influence strategies appears warranted. The authors thank Tiffani Oltmanns and Daniel Taraba for their assistance ...

How many positive claims should be used to produce the most positive impression of a product or service? This article posits that in settings where consumers know that the message source has a persuasion motive, the optimal number of positive claims is three. More claims are better until the fourth claim, at which time consumers’ persuasion knowledge causes them to see all the claims with skepticism. The studies in this paper establish and explore this pattern, which is referred to as the charm of three. An initial experiment finds that impressions peak at three claims for sources with persuasion motives but not for sources without a persuasion motive. Experiment 2 finds that this occurs for attitudes and impressions, and that increases in skepticism after three claims explain the effect. Two final experiments examine the process by investigating how cognitive load and sequential claims impact the effect.

Expectations about how long one will live are essential for making informed choices about many important personal decisions. We propose that beliefs (expectations) about longevity are a response constructed at the time of judgment, subject to irrelevant task and context factors, and leading to predictable biases. Specifically, we examine whether life expectancy is affected by the framing of expectations questions, as well as by factors that actually affect longevity such as the age, gender, and self-reported health status of the respondent. One frame asks people to provide probabilities of living to a certain age or older; the other frame asks people to provide probabilities of dying by a certain age or younger. These two answers should be complements, but we find that estimated probabilities differ significantly in the two conditions. People in the live-to frame report that they have a 55% chance of being alive at age 85, whereas people in the die-by frame report that they have a 68% chance of being dead at age 85. Overall, estimated mean life expectancies, across three studies and over 2300 respondents were between 7.29 to 9.17 years longer when solicited in the live-to frame. We compare estimated life expectancies with Social Security Administration (SSA) life tables and find that the judgments of individuals in the live-to frame were closer to actual life expectancies for ages 65 and 75, while in the die-by condition, the respondents were more accurate for older ages, e.g., age 95. On a process level, we show that the framing effect on judgments is partially mediated by the relative number of thoughts in favor of being alive at that age. Finally, we find that individual differences in life expectancies relate to differences in stated preference for life annuities, a product that provides insurance against outliving one’s savings. The implications of “constructed” life expectancies for models of financial decision making, and for improving financial decision making are discussed.