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The Effect of Attitudes Regarding Retirement on Pension Savings

Author

Listed:
  • 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)

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.

Suggested Citation

  • Ravit Rubinstein-Levi & Haim Kedar-Levy, 2019. "The Effect of Attitudes Regarding Retirement on Pension Savings," Review of Economics & Finance, Better Advances Press, Canada, vol. 15, pages 1-13, February.
    • Handle: RePEc:bap:journl:190101
    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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    References listed on IDEAS

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    1. Ravit Rubinstein-Levi, 2021. "Disadvantaged Employees in the Trap of Defined Contribution Pension Plans," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 55-76.

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    More about this item

    Keywords

    Attitudes; Decision-making; Pension; Retirement; Savings;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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