Save More Tomorrow (Thaler & Benartzi, 2004)
A landmark behavioral-economics program that increased employee savings rates from 3.5% to 13.6% over 40 months by asking workers to pre-commit future pay raises to their retirement plan. The mechanism: pre-commitment plus automatic escalation removes the pain of saving today.
The core insight
People are willing to save more later, even when they resist saving more now. Present-bias makes cutting today's consumption feel painful; committing tomorrow's (not-yet-owned) raise doesn't.
The mechanism
Employees opted in once. Contribution rates then rose automatically with every raise until reaching a cap. Because take-home pay never dropped, no active decision to sacrifice was ever required.
Why it matters to Squirrelll.ing
The same principle drives Savings Pods: commit once, let automation escalate, remove the moment of pain. The Daily Pool applies the same logic at the community level.
Key Takeaways
- Pre-commitment + automation beats willpower.
- Present-bias is the enemy; scheduling is the fix.
- Small default increases compound into large behavioral change.
References
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