Behavioural economics applied on retirement saving policies
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Behavioural economics applied on retirement saving policies

2023, Jul 20    

When completing my degree at UQAM university (2013-2016) I took a directed readings class on behavioural economics applied on retirement saving policies. This was an independant class, meaning that I took the initiative to reach a professor and I was the only student working on that project. The report is in French, but here below I leave the translated introduction.


In this text, we are going to study the application of behavioral economics to the study of policies targeting retirement savings. Retirement savings has become a significant issue, on one hand, we have an aging population, therefore a future increase in the tax burden that taxpayers will have to pay. On the other hand, we have financial products that are becoming more and more sophisticated, and which require increased financial literacy. In Quebec, as everywhere in Canada, the subject is topical. The following document, which is divided into four sections, will analyze various academic economics articles that focus on different aspects of the question. First, we try to quantify the savings needed for savers to have a good retirement, then we focus on the situation in Canada. We then try to explain the behavioral biases that we have discovered thanks to psychological, economic theories and empirical data. We look at the inconsistency over time, which is at the origin of procrastination and inertia, as well as loss aversion and mental accounting. We end up talking about public policies that take these biases into account and that could or have already been implemented. Then, we compare with the retirement plans of Quebec such as the TFSA, the VRSP and the RRSP.