Table 2 of the Save More Tomorrow Paper Has Five Columns, and 13.6% Is Only One of Them

The summary of Save More Tomorrow that circulates fits on a sticky note: savings rates went from 3.5 percent to 13.6 percent. In Thaler and Benartzi’s paper, those two numbers sit in one column of a five-column table, and the neighbouring column describes people who got better results faster, with no escalation plan at all.

Thaler and Benartzi (2004, Journal of Political Economy 112(S1): S164-S187) report that at a midsize US manufacturer, 162 of the 207 employees who turned down a consultant’s immediate savings recommendation, 78 percent, joined a plan that raised their contribution by three percentage points at each pay raise. Their average rate rose from 3.5 to 13.6 percent over four raises, which took 40 months, and 80 percent of joiners stayed through the fourth raise. The authors state that this first implementation “was not conducted as an experiment with random assignment to conditions”: employees chose their own column.

Sorting 315 employees into five groups

The company had 315 employees eligible for its retirement plan and hired an investment consultant to meet each of them. Twenty-nine did not meet him. Of the 286 who did, he first proposed an immediate increase in saving, usually no more than five percentage points. Seventy-nine accepted. The remaining 207 were offered the escalating alternative, and 162 took it; 45 refused that too.

Observation	Did not meet consultant (29)	Accepted his immediate rate (79)	Joined Save More Tomorrow (162)	Declined both (45)	All (315)
Before advice	6.6	4.4	3.5	6.1	4.4
1st raise	6.5	9.1	6.5	6.3	7.1
2nd raise	6.8	8.9	9.4	6.2	8.6
3rd raise	6.6	8.7	11.6	6.1	9.8
4th raise	6.2	8.8	13.6	5.9	10.6

Average saving rate, percent of pay, as printed in the paper’s Table 2. Each year’s figures cover only workers still employed.

Both of the figures that float around the internet are in this table. The 11.6 percent that some summaries attach to “three and a half years” is the third-raise number; the 13.6 comes one raise later. The footnote under the table adds that each year counts only workers still at the company, so the sample “shrinks over time from 315 to 229.” That is 86 people, or 27 percent, who are in the first column and absent from the last.

Who led, and when the lead changed hands

Reading across the rows, the people who accepted the consultant’s immediate advice went from 4.4 to 9.1 percent at once and then drifted down a little, to 8.8. The escalating plan started lower and climbed. My arithmetic on the table: at the first raise the advice-takers led by 2.6 points (9.1 against 6.5). By the second raise the escalating group had passed them, 9.4 to 8.9. By the fourth, it led by 4.8 points.

The steps were also smaller than the schedule. A plan adding three points at each of four raises, starting from 3.5, would end at 15.5 percent. The group reached 13.6. The increments between observations were 3.0, 2.9, 2.2 and 2.0 points. That gap reflects the 32 people who dropped out of the escalation along the way and, I would guess, some who hit the tax-deferred maximum, though the paper does not break out which.

The self-selection objection and the authors’ replies

Thaler and Benartzi anticipated the objection and give three replies. The joiners saved very little before the plan, so a newly acquired “taste for saving” is an awkward explanation. The escalating plan was offered only to people who had refused the consultant’s immediate increase, so if anyone had a stronger taste for saving, it was the advice-takers. And all 286 who met the consultant heard the same information, which makes an information-only account hard to build.

Both replies are reasonable. Neither is a test. The nearest thing to a comparison group at this site, the 45 who declined, started at 6.1 percent, 2.6 points above the joiners, and stayed flat. The table has no group that began near 3.5 percent and stayed out of the plan, so a rebound from an unusually low starting point cannot be ruled out from these data.

Two later sites, one with a comparison group

The paper has two further implementations, and their results are smaller and thinner. At Ispat Inland, a steel company, there was no consultant. Employees got a single invitation letter from management and the union plus some cafeteria posters, and the paper reports 615 people (18.1 percent) among those already in the 401(k) and not at the maximum, plus 165 (8.2 percent) of those not yet enrolled, joined. Only one raise had occurred at publication.

At Philips Electronics, two divisions got the plan and 28 others served as a comparison. Employees there who were already in the 401(k) and joined raised their saving rate by about 1.5 points, while the other divisions barely moved. That is the paper’s only design with divisions held out, and the gap it shows is about 1.5 points.

The take-up numbers are not directly comparable. The 78 percent comes from people who had just sat with a consultant and declined his immediate advice, whereas Ispat counted a mailing to a whole workforce. The spread from 8 to 78 percent still raises the question of how much of the take-up came from the person in the room.

The 32 who left, and one supervisor

Thirty-two of 162 joiners dropped out: 3 before the second raise, 23 between the second and third, and 6 between the third and fourth. A footnote explains the large middle number: “most of the employees who dropped out between the second and third pay raises worked for a single supervisor who apparently disapproved of the SMarT plan.” In a plan sold on automaticity, the largest wave of exits apparently traced back to one person’s opinion.

Those who left also kept most of their gains. The authors note that they “merely stopped the future increases from taking place” rather than returning to their original rates.

What survives the reading

The strong claim, that an escalating commitment multiplied one group’s savings rate nearly fourfold, rests on one site with no randomization and no held-out divisions. The narrower claim holds up better: when people who would not accept an immediate jump were offered a jump that began later and rode along with raises, most took it, and most stayed. That is a result about timing and framing, and the Philips comparison gives it modest support. It is also a clean example of precommitment as distinct from a commitment device: the decision about next year’s contribution is made today, and payroll carries it out. Whether money or a witness is the better thing to attach to a behavior that cannot be automated is the question in a review of field experiments on stakes.