Save More Tomorrow (SMarT) Commitment Program
University of Chicago / Bernartzi & Thaler · United States · 2004
Summary
Save More Tomorrow is one of the most consequential behavioral economics experiments ever conducted. The core insight: present bias makes it painful to give up current income, but committing to give up future income feels almost costless. By anchoring the savings increase to pay raises — so workers never experienced a take-home pay reduction — Thaler and Benartzi transformed the savings rate from 3.5% to 13.6% over four years among participants. The experiment's impact far exceeded its original sample: the mechanism is now embedded in federal pension law and used by most major retirement plan administrators. It is the clearest example of a behavioral experiment producing policy change at scale.
Research question
"Can a commitment device — pre-committing to increase savings rate with future pay raises — overcome present bias and increase retirement savings?"
Methodology
Intervention
Workers at a mid-sized manufacturing company offered: (a) immediate savings rate increase recommended by financial advisor, or (b) SMarT plan — commit now to automatically increase savings rate by 3% at each future pay raise, with option to opt out; workers who declined the immediate increase were offered SMarT
Assignment
Field experiment with sequential design (not randomized; but comparison between immediate advice, SMarT, and advice refusers provides identification)
Sample size
315 employees across multiple cohorts
Primary outcome
Savings rate at enrollment; savings rate at 4-year follow-up; participation retention
Effect estimate
SMarT participants: savings rate increased from 3.5% to 13.6% over 4 years; immediate advice group: from 4.4% to 8.8%; advice refusers: 6.6% (no change). SMarT had 78% retention rate vs. 26% for immediate increase group.
Decision
SMarT mechanism incorporated into Pension Protection Act of 2006 (automatic escalation provisions); adopted by Vanguard, Fidelity, and most major 401(k) providers; standard feature of employer-sponsored retirement plans serving 50+ million workers
Result
Positive
SMarT participants: savings rate increased from 3.5% to 13.6% over 4 years; immediate advice group: from 4.4% to 8.8%; advice refusers: 6.6% (no change). SMarT had 78% retention rate vs. 26% for immediate increase group.
Evidence strength
Limited
Observational or pre-post design; correlation not necessarily causal.
Replication status
Replicated
Institution
University of Chicago / Bernartzi & Thaler
Location
United States
Year
2004
Policy area
Financial Services
Mechanism
Commitment device