0:00:00.000,0:00:03.000 I'm going to talk today about saving more, 0:00:03.000,0:00:06.000 but not today, tomorrow. 0:00:06.000,0:00:08.000 I'm going to talk about Save More Tomorrow. 0:00:08.000,0:00:10.000 It's a program that Richard Thaler 0:00:10.000,0:00:12.000 from the University of Chicago and I 0:00:12.000,0:00:15.000 devised maybe 15 years ago. 0:00:15.000,0:00:17.000 The program, in a sense, 0:00:17.000,0:00:19.000 is an example of behavioral finance 0:00:19.000,0:00:21.000 on steroids -- 0:00:21.000,0:00:24.000 how we could really use behavioral finance. 0:00:24.000,0:00:27.000 Now you might ask, what is behavioral finance? 0:00:27.000,0:00:30.000 So let's think about how we manage our money. 0:00:30.000,0:00:33.000 Let's start with mortgages. 0:00:33.000,0:00:35.000 It's kind of a recent topic, 0:00:35.000,0:00:37.000 at least in the U.S. 0:00:37.000,0:00:39.000 A lot of people buy 0:00:39.000,0:00:42.000 the biggest house they can afford, 0:00:42.000,0:00:45.000 and actually slightly bigger than that. 0:00:45.000,0:00:48.000 And then they foreclose. 0:00:48.000,0:00:50.000 And then they blame the banks 0:00:50.000,0:00:53.000 for being the bad guys who gave them the mortgages. 0:00:53.000,0:00:55.000 Let's also think about 0:00:55.000,0:00:57.000 how we manage risks -- 0:00:57.000,0:00:59.000 for example, investing in the stock market. 0:00:59.000,0:01:02.000 Two years ago, three years ago, about four years ago, 0:01:02.000,0:01:04.000 markets did well. 0:01:04.000,0:01:07.000 We were risk takers, of course. 0:01:07.000,0:01:09.000 Then market stocks seize 0:01:09.000,0:01:11.000 and we're like, "Wow. 0:01:11.000,0:01:14.000 These losses, they feel, emotionally, 0:01:14.000,0:01:17.000 they feel very different 0:01:17.000,0:01:20.000 from what we actually thought about it 0:01:20.000,0:01:22.000 when markets were going up." 0:01:22.000,0:01:25.000 So we're probably not doing a great job 0:01:25.000,0:01:27.000 when it comes to risk taking. 0:01:27.000,0:01:30.000 How many of you have iPhones? 0:01:30.000,0:01:33.000 Anyone? Wonderful. 0:01:33.000,0:01:36.000 I would bet many more of you 0:01:36.000,0:01:39.000 insure your iPhone -- 0:01:39.000,0:01:42.000 you're implicitly buying insurance by having an extended warranty. 0:01:42.000,0:01:44.000 What if you lose your iPhone? 0:01:44.000,0:01:46.000 What if you do this? 0:01:46.000,0:01:48.000 How many of you have kids? 0:01:48.000,0:01:50.000 Anyone? 0:01:50.000,0:01:52.000 Keep your hands up 0:01:52.000,0:01:55.000 if you have sufficient life insurance. 0:01:55.000,0:01:57.000 I see a lot of hands coming down. 0:01:57.000,0:01:59.000 I would predict, 0:01:59.000,0:02:01.000 if you're a representative sample, 0:02:01.000,0:02:03.000 that many more of you 0:02:03.000,0:02:06.000 insure your iPhones than your lives, 0:02:06.000,0:02:08.000 even when you have kids. 0:02:08.000,0:02:11.000 We're not doing that well when it comes to insurance. 0:02:11.000,0:02:15.000 The average American household 0:02:15.000,0:02:18.000 spends 1,000 dollars a year 0:02:18.000,0:02:20.000 on lotteries. 0:02:20.000,0:02:23.000 And I know it sounds crazy. 0:02:23.000,0:02:26.000 How many of you spend a thousand dollars a year on lotteries? 0:02:26.000,0:02:28.000 No one. 0:02:28.000,0:02:31.000 So that tells us that the people not in this room 0:02:31.000,0:02:33.000 are spending more than a thousand 0:02:33.000,0:02:36.000 to get the average to a thousand. 0:02:36.000,0:02:38.000 Low-income people 0:02:38.000,0:02:42.000 spend a lot more than a thousand on lotteries. 0:02:42.000,0:02:44.000 So where does it take us? 0:02:44.000,0:02:47.000 We're not doing a great job managing money. 0:02:47.000,0:02:50.000 Behavioral finance is really a combination 0:02:50.000,0:02:52.000 of psychology and economics, 0:02:52.000,0:02:54.000 trying to understand 0:02:54.000,0:02:56.000 the money mistakes people make. 0:02:56.000,0:02:58.000 And I can keep standing here 0:02:58.000,0:03:02.000 for the 12 minutes and 53 seconds that I have left 0:03:02.000,0:03:04.000 and make fun of all sorts of ways 0:03:04.000,0:03:06.000 we manage money, 0:03:06.000,0:03:09.000 and at the end you're going to ask, "How can we help people?" 0:03:09.000,0:03:12.000 And that's what I really want to focus on today. 0:03:12.000,0:03:14.000 How do we take an understanding 0:03:14.000,0:03:17.000 of the money mistakes people make, 0:03:17.000,0:03:20.000 and then turning the behavioral challenges 0:03:20.000,0:03:22.000 into behavioral solutions? 0:03:22.000,0:03:24.000 And what I'm going to talk about today 0:03:24.000,0:03:26.000 is Save More Tomorrow. 0:03:26.000,0:03:28.000 I want to address the issue 0:03:28.000,0:03:30.000 of savings. 0:03:30.000,0:03:32.000 We have on the screen 0:03:32.000,0:03:34.000 a representative sample 0:03:34.000,0:03:36.000 of 100 Americans. 0:03:36.000,0:03:39.000 And we're going to look at their saving behavior. 0:03:39.000,0:03:41.000 First thing to notice is, 0:03:41.000,0:03:43.000 half of them 0:03:43.000,0:03:45.000 do not even have access 0:03:45.000,0:03:47.000 to a 401(k) plan. 0:03:47.000,0:03:50.000 They cannot make savings easy. 0:03:50.000,0:03:53.000 They cannot have money go away from their paycheck 0:03:53.000,0:03:55.000 into a 401(k) plan 0:03:55.000,0:03:57.000 before they see it, 0:03:57.000,0:03:59.000 before they can touch it. 0:03:59.000,0:04:02.000 What about the remaining half of the people? 0:04:02.000,0:04:05.000 Some of them elect not to save. 0:04:05.000,0:04:07.000 They're just too lazy. 0:04:07.000,0:04:10.000 They never get around to logging into a complicated website 0:04:10.000,0:04:13.000 and doing 17 clicks to join the 401(k) plan. 0:04:13.000,0:04:15.000 And then they have to decide how they're going to invest 0:04:15.000,0:04:17.000 in their 52 choices, 0:04:17.000,0:04:21.000 and they never heard about what is a money market fund. 0:04:21.000,0:04:23.000 And they get overwhelmed and the just don't join. 0:04:23.000,0:04:28.000 How many people end up saving to a 401(k) plan? 0:04:28.000,0:04:31.000 One third of Americans. 0:04:31.000,0:04:33.000 Two thirds are not saving now. 0:04:33.000,0:04:35.000 Are they saving enough? 0:04:35.000,0:04:37.000 Take out those 0:04:37.000,0:04:39.000 who say they save too little. 0:04:39.000,0:04:41.000 One out of 10 0:04:41.000,0:04:44.000 are saving enough. 0:04:44.000,0:04:46.000 Nine out of 10 0:04:46.000,0:04:49.000 either cannot save through their 401(k) plan, 0:04:49.000,0:04:52.000 decide not to save -- or don't decide -- 0:04:52.000,0:04:55.000 or save too little. 0:04:55.000,0:04:57.000 We think we have a problem 0:04:57.000,0:04:59.000 of people saving too much. 0:04:59.000,0:05:01.000 Let's look at that. 0:05:01.000,0:05:03.000 We have one person -- 0:05:03.000,0:05:06.000 well, actually we're going to slice him in half 0:05:06.000,0:05:09.000 because it's less than one percent. 0:05:09.000,0:05:12.000 Roughly half a percent of Americans 0:05:12.000,0:05:17.000 feel that they save too much. 0:05:17.000,0:05:19.000 What are we going to do about it? 0:05:19.000,0:05:21.000 That's what I really want to focus on. 0:05:21.000,0:05:23.000 We have to understand 0:05:23.000,0:05:25.000 why people are not saving, 0:05:25.000,0:05:27.000 and then we can hopefully flip 0:05:27.000,0:05:29.000 the behavioral challenges 0:05:29.000,0:05:31.000 into behavioral solutions, 0:05:31.000,0:05:34.000 and then see how powerful it might be. 0:05:34.000,0:05:36.000 So let me divert for a second 0:05:36.000,0:05:38.000 as we're going to identify the problems, 0:05:38.000,0:05:41.000 the challenges, the behavioral challenges, 0:05:41.000,0:05:43.000 that prevent people from saving. 0:05:43.000,0:05:47.000 I'm going to divert and talk about bananas and chocolate. 0:05:47.000,0:05:50.000 Suppose we had another wonderful TED event next week. 0:05:50.000,0:05:52.000 And during the break 0:05:52.000,0:05:54.000 there would be a snack 0:05:54.000,0:05:56.000 and you could choose bananas or chocolate. 0:05:56.000,0:05:59.000 How many of you think you would like to have bananas 0:05:59.000,0:06:01.000 during this hypothetical TED event next week? 0:06:01.000,0:06:03.000 Who would go for bananas? 0:06:03.000,0:06:05.000 Wonderful. 0:06:05.000,0:06:07.000 I predict scientifically 0:06:07.000,0:06:10.000 74 percent of you will go for bananas. 0:06:10.000,0:06:14.000 Well that's at least what one wonderful study predicted. 0:06:15.000,0:06:18.000 And then count down the days 0:06:18.000,0:06:22.000 and see what people ended up eating. 0:06:23.000,0:06:26.000 The same people that imagined themselves 0:06:26.000,0:06:28.000 eating the bananas 0:06:28.000,0:06:30.000 ended up eating chocolates 0:06:30.000,0:06:32.000 a week later. 0:06:32.000,0:06:34.000 Self-control 0:06:34.000,0:06:37.000 is not a problem in the future. 0:06:37.000,0:06:39.000 It's only a problem now 0:06:39.000,0:06:43.000 when the chocolate is next to us. 0:06:43.000,0:06:46.000 What does it have to do with time and savings, 0:06:46.000,0:06:49.000 this issue of immediate gratification? 0:06:49.000,0:06:53.000 Or as some economists call it, present bias. 0:06:53.000,0:06:55.000 We think about saving. We know we should be saving. 0:06:55.000,0:06:58.000 We know we'll do it next year, but today let us go and spend. 0:06:58.000,0:07:00.000 Christmas is coming, 0:07:00.000,0:07:03.000 we might as well buy a lot of gifts for everyone we know. 0:07:03.000,0:07:07.000 So this issue of present bias 0:07:07.000,0:07:09.000 causes us to think about saving, 0:07:09.000,0:07:11.000 but end up spending. 0:07:11.000,0:07:13.000 Let me now talk 0:07:13.000,0:07:15.000 about another behavioral obstacle to saving 0:07:15.000,0:07:17.000 having to do with inertia. 0:07:17.000,0:07:19.000 But again, a little diversion 0:07:19.000,0:07:22.000 to the topic of organ donation. 0:07:22.000,0:07:25.000 Wonderful study comparing different countries. 0:07:25.000,0:07:28.000 We're going to look at two similar countries, 0:07:28.000,0:07:31.000 Germany and Austria. 0:07:31.000,0:07:33.000 And in Germany, 0:07:33.000,0:07:35.000 if you would like to donate your organs -- 0:07:35.000,0:07:37.000 God forbid something really bad 0:07:37.000,0:07:39.000 happens to you -- 0:07:39.000,0:07:42.000 when you get your driving license or an I.D., 0:07:42.000,0:07:44.000 you check the box saying, 0:07:44.000,0:07:46.000 "I would like to donate my organs." 0:07:46.000,0:07:48.000 Not many people like checking boxes. 0:07:48.000,0:07:50.000 It takes effort. You need to think. 0:07:50.000,0:07:53.000 Twelve percent do. 0:07:53.000,0:07:56.000 Austria, a neighboring country, 0:07:56.000,0:07:58.000 slightly similar, slightly different. 0:07:58.000,0:08:00.000 What's the difference? 0:08:00.000,0:08:02.000 Well, you still have choice. 0:08:02.000,0:08:04.000 You will decide 0:08:04.000,0:08:07.000 whether you want to donate your organs or not. 0:08:07.000,0:08:09.000 But when you get your driving license, 0:08:09.000,0:08:11.000 you check the box 0:08:11.000,0:08:15.000 if you do not want to donate your organ. 0:08:15.000,0:08:17.000 Nobody checks boxes. 0:08:17.000,0:08:19.000 That's kind of too much effort. 0:08:19.000,0:08:22.000 One percent check the box. The rest do nothing. 0:08:22.000,0:08:24.000 Doing nothing is very common. 0:08:24.000,0:08:27.000 Not many people check boxes. 0:08:27.000,0:08:29.000 What are the implications 0:08:29.000,0:08:31.000 to saving lives 0:08:31.000,0:08:34.000 and having organs available? 0:08:34.000,0:08:36.000 In Germany, 12 percent check the box. 0:08:36.000,0:08:39.000 Twelve percent are organ donors. 0:08:39.000,0:08:41.000 Huge shortage of organs, 0:08:41.000,0:08:43.000 God forbid, if you need one. 0:08:43.000,0:08:46.000 In Austria, again, nobody checks the box. 0:08:46.000,0:08:49.000 Therefore, 99 percent of people 0:08:49.000,0:08:51.000 are organ donors. 0:08:51.000,0:08:53.000 Inertia, lack of action. 0:08:53.000,0:08:55.000 What is the default setting 0:08:55.000,0:08:57.000 if people do nothing, 0:08:57.000,0:09:00.000 if they keep procrastinating, if they don't check the boxes? 0:09:00.000,0:09:02.000 Very powerful. 0:09:02.000,0:09:04.000 We're going to talk 0:09:04.000,0:09:08.000 about what happens if people are overwhelmed and scared 0:09:08.000,0:09:11.000 to make their 401(k) choices. 0:09:11.000,0:09:14.000 Are we going to make them automatically join the plan, 0:09:14.000,0:09:16.000 or are they going to be left out? 0:09:16.000,0:09:19.000 In too many 401(k) plans, 0:09:19.000,0:09:21.000 if people do nothing, 0:09:21.000,0:09:24.000 it means they're not saving for retirement, 0:09:24.000,0:09:26.000 if they don't check the box. 0:09:26.000,0:09:29.000 And checking the box takes effort. 0:09:29.000,0:09:32.000 So we've chatted about a couple of behavioral challenges. 0:09:32.000,0:09:35.000 One more before we flip the challenges into solutions, 0:09:35.000,0:09:37.000 having to do with monkeys and apples. 0:09:37.000,0:09:39.000 No, no, no, this is a real study 0:09:39.000,0:09:43.000 and it's got a lot to do with behavioral economics. 0:09:43.000,0:09:46.000 One group of monkeys gets an apple, they're pretty happy. 0:09:46.000,0:09:48.000 The other group gets two apples, one is taken away. 0:09:48.000,0:09:50.000 They still have an apple left. 0:09:50.000,0:09:53.000 They're really mad. 0:09:53.000,0:09:56.000 Why have you taken our apple? 0:09:56.000,0:09:59.000 This is the notion of loss aversion. 0:09:59.000,0:10:01.000 We hate losing stuff, 0:10:01.000,0:10:04.000 even if it doesn't mean a lot of risk. 0:10:04.000,0:10:07.000 You would hate to go to the ATM, 0:10:07.000,0:10:09.000 take out 100 dollars 0:10:09.000,0:10:11.000 and notice that you lost one of those $20 bills. 0:10:11.000,0:10:13.000 It's very painful, 0:10:13.000,0:10:15.000 even though it doesn't mean anything. 0:10:15.000,0:10:19.000 Those 20 dollars might have been a quick lunch. 0:10:19.000,0:10:23.000 So this notion of loss aversion 0:10:23.000,0:10:26.000 kicks in when it comes to savings too, 0:10:26.000,0:10:28.000 because people, mentally 0:10:28.000,0:10:31.000 and emotionally and intuitively 0:10:31.000,0:10:33.000 frame savings as a loss 0:10:33.000,0:10:36.000 because I have to cut my spending. 0:10:36.000,0:10:38.000 So we talked about 0:10:38.000,0:10:40.000 all sorts of behavioral challenges 0:10:40.000,0:10:44.000 having to do with savings eventually. 0:10:44.000,0:10:47.000 Whether you think about immediate gratification, 0:10:47.000,0:10:50.000 and the chocolates versus bananas, 0:10:50.000,0:10:53.000 it's just painful to save now. 0:10:53.000,0:10:55.000 It's a lot more fun 0:10:55.000,0:10:57.000 to spend now. 0:10:57.000,0:11:00.000 We talked about inertia and organ donations 0:11:00.000,0:11:02.000 and checking the box. 0:11:02.000,0:11:04.000 If people have to check a lot of boxes 0:11:04.000,0:11:06.000 to join a 401(k) plan, 0:11:06.000,0:11:08.000 they're going to keep procrastinating 0:11:08.000,0:11:10.000 and not join. 0:11:10.000,0:11:12.000 And last, we talked about loss aversion, 0:11:12.000,0:11:14.000 and the monkeys and the apples. 0:11:14.000,0:11:17.000 If people frame mentally 0:11:17.000,0:11:20.000 saving for retirement as a loss, 0:11:20.000,0:11:23.000 they're not going to be saving for retirement. 0:11:23.000,0:11:25.000 So we've got these challenges, 0:11:25.000,0:11:27.000 and what Richard Thaler and I 0:11:27.000,0:11:29.000 were always fascinated by -- 0:11:29.000,0:11:31.000 take behavioral finance, 0:11:31.000,0:11:33.000 make it behavioral finance on steroids 0:11:33.000,0:11:35.000 or behavioral finance 2.0 0:11:35.000,0:11:37.000 or behavioral finance in action -- 0:11:37.000,0:11:41.000 flip the challenges into solutions. 0:11:41.000,0:11:44.000 And we came up with an embarrassingly simple solution 0:11:44.000,0:11:48.000 called Save More, not today, Tomorrow. 0:11:48.000,0:11:50.000 How is it going to solve the challenges 0:11:50.000,0:11:52.000 we chatted about? 0:11:52.000,0:11:54.000 If you think about the problem 0:11:54.000,0:11:56.000 of bananas versus chocolates, 0:11:56.000,0:11:59.000 we think we're going to eat bananas next week. 0:11:59.000,0:12:02.000 We think we're going to save more next year. 0:12:02.000,0:12:05.000 Save More Tomorrow 0:12:05.000,0:12:07.000 invites employees 0:12:07.000,0:12:09.000 to save more maybe next year -- 0:12:09.000,0:12:11.000 sometime in the future 0:12:11.000,0:12:13.000 when we can imagine ourselves 0:12:13.000,0:12:15.000 eating bananas, 0:12:15.000,0:12:17.000 volunteering more in the community, 0:12:17.000,0:12:21.000 exercising more and doing all the right things on the planet. 0:12:21.000,0:12:24.000 Now we also talked about checking the box 0:12:24.000,0:12:27.000 and the difficulty of taking action. 0:12:27.000,0:12:29.000 Save More Tomorrow 0:12:29.000,0:12:31.000 makes it easy. 0:12:31.000,0:12:33.000 It's an autopilot. 0:12:33.000,0:12:37.000 Once you tell me you would like to save more in the future, 0:12:37.000,0:12:39.000 let's say every January 0:12:39.000,0:12:42.000 you're going to be saving more automatically 0:12:42.000,0:12:45.000 and it's going to go away from your paycheck to the 401(k) plan 0:12:45.000,0:12:47.000 before you see it, before you touch it, 0:12:47.000,0:12:49.000 before you get the issue 0:12:49.000,0:12:52.000 of immediate gratification. 0:12:52.000,0:12:55.000 But what are we going to do about the monkeys 0:12:55.000,0:12:57.000 and loss aversion? 0:12:57.000,0:12:59.000 Next January comes 0:12:59.000,0:13:01.000 and people might feel that if they save more, 0:13:01.000,0:13:04.000 they have to spend less, and that's painful. 0:13:05.000,0:13:07.000 Well, maybe it shouldn't be just January. 0:13:07.000,0:13:10.000 Maybe we should make people save more 0:13:10.000,0:13:13.000 when they make more money. 0:13:13.000,0:13:16.000 That way, when they make more money, when they get a pay raise, 0:13:16.000,0:13:20.000 they don't have to cut their spending. 0:13:20.000,0:13:22.000 They take a little bit 0:13:22.000,0:13:24.000 of the increase in the paycheck home 0:13:24.000,0:13:26.000 and spend more -- 0:13:26.000,0:13:28.000 take a little bit of the increase 0:13:28.000,0:13:30.000 and put it in a 401(k) plan. 0:13:30.000,0:13:32.000 So that is the program, 0:13:32.000,0:13:34.000 embarrassingly simple, 0:13:34.000,0:13:36.000 but as we're going to see, 0:13:36.000,0:13:38.000 extremely powerful. 0:13:38.000,0:13:40.000 We first implemented it, 0:13:40.000,0:13:42.000 Richard Thaler and I, 0:13:42.000,0:13:45.000 back in 1998. 0:13:45.000,0:13:48.000 Mid-sized company in the Midwest, 0:13:48.000,0:13:50.000 blue collar employees 0:13:50.000,0:13:52.000 struggling to pay their bills 0:13:52.000,0:13:54.000 repeatedly told us 0:13:54.000,0:13:57.000 they cannot save more right away. 0:13:57.000,0:14:00.000 Saving more today is not an option. 0:14:00.000,0:14:02.000 We invited them to save 0:14:02.000,0:14:05.000 three percentage points more 0:14:05.000,0:14:08.000 every time they get a pay raise. 0:14:08.000,0:14:11.000 And here are the results. 0:14:11.000,0:14:13.000 We're seeing here a three and a half-year period, 0:14:13.000,0:14:15.000 four pay raises, 0:14:15.000,0:14:17.000 people who were struggling to save, 0:14:17.000,0:14:19.000 were saving three percent of their paycheck, 0:14:19.000,0:14:21.000 three and a half years later 0:14:21.000,0:14:24.000 saving almost four times as much, 0:14:24.000,0:14:27.000 almost 14 percent. 0:14:27.000,0:14:29.000 And there's shoes and bicycles 0:14:29.000,0:14:31.000 and things on this chart 0:14:31.000,0:14:33.000 because I don't want to just throw numbers 0:14:33.000,0:14:35.000 in a vacuum. 0:14:35.000,0:14:38.000 I want, really, to think about the fact 0:14:38.000,0:14:40.000 that saving four times more 0:14:40.000,0:14:42.000 is a huge difference 0:14:42.000,0:14:44.000 in terms of the lifestyle 0:14:44.000,0:14:46.000 that people will be able to afford. 0:14:46.000,0:14:48.000 It's real. 0:14:48.000,0:14:51.000 It's not just numbers on a piece of paper. 0:14:51.000,0:14:53.000 Whereas with saving three percent, 0:14:53.000,0:14:55.000 people might have to add nice sneakers 0:14:55.000,0:14:57.000 so they can walk, 0:14:57.000,0:15:01.000 because they won't be able to afford anything else, 0:15:01.000,0:15:03.000 when they save 14 percent 0:15:03.000,0:15:06.000 they might be able to maybe have nice dress shoes 0:15:06.000,0:15:09.000 to walk to the car to drive. 0:15:09.000,0:15:11.000 This is a real difference. 0:15:11.000,0:15:16.000 By now, about 60 percent of the large companies 0:15:16.000,0:15:19.000 actually have programs like this in place. 0:15:19.000,0:15:22.000 It's been part of the Pension Protection Act. 0:15:22.000,0:15:24.000 And needless to say that Thaler and I 0:15:24.000,0:15:27.000 have been blessed to be part of this program 0:15:27.000,0:15:29.000 and make a difference. 0:15:29.000,0:15:31.000 Let me wrap 0:15:31.000,0:15:34.000 with two key messages. 0:15:34.000,0:15:37.000 One is behavioral finance 0:15:37.000,0:15:40.000 is extremely powerful. 0:15:40.000,0:15:43.000 This is just one example. 0:15:43.000,0:15:45.000 Message two 0:15:45.000,0:15:47.000 is there's still a lot to do. 0:15:47.000,0:15:50.000 This is really the tip of the iceberg. 0:15:50.000,0:15:53.000 If you think about people and mortgages 0:15:53.000,0:15:56.000 and buying houses and then not being able to pay for it, 0:15:56.000,0:15:58.000 we need to think about that. 0:15:58.000,0:16:01.000 If you're thinking about people taking too much risk 0:16:01.000,0:16:04.000 and not understanding how much risk they're taking 0:16:04.000,0:16:06.000 or taking too little risk, 0:16:06.000,0:16:08.000 we need to think about that. 0:16:08.000,0:16:11.000 If you think about people spending a thousand dollars a year 0:16:11.000,0:16:13.000 on lottery tickets, 0:16:13.000,0:16:15.000 we need to think about that. 0:16:15.000,0:16:17.000 The average actually, 0:16:17.000,0:16:19.000 the record is in Singapore. 0:16:19.000,0:16:21.000 The average household 0:16:21.000,0:16:24.000 spends $4,000 a year on lottery tickets. 0:16:24.000,0:16:26.000 We've got a lot to do, 0:16:26.000,0:16:28.000 a lot to solve, 0:16:28.000,0:16:31.000 also in the retirement area 0:16:31.000,0:16:33.000 when it comes to what people do with their money 0:16:33.000,0:16:35.000 after retirement. 0:16:35.000,0:16:37.000 One last question: 0:16:37.000,0:16:40.000 How many of you feel comfortable 0:16:40.000,0:16:42.000 that as you're planning for retirement 0:16:42.000,0:16:45.000 you have a really solid plan 0:16:45.000,0:16:47.000 when you're going to retire, 0:16:47.000,0:16:50.000 when you're going to claim Social Security benefits, 0:16:50.000,0:16:52.000 what lifestyle to expect, 0:16:52.000,0:16:54.000 how much to spend every month 0:16:54.000,0:16:56.000 so you're not going to run out of money? 0:16:56.000,0:16:59.000 How many of you feel you have a solid plan for the future 0:16:59.000,0:17:03.000 when it comes to post-retirement decisions. 0:17:04.000,0:17:07.000 One, two, three, four. 0:17:07.000,0:17:09.000 Less than three percent 0:17:09.000,0:17:11.000 of a very sophisticated audience. 0:17:11.000,0:17:14.000 Behavioral finance has a long way. 0:17:14.000,0:17:16.000 There's a lot of opportunities 0:17:16.000,0:17:20.000 to make it powerful again and again and again. 0:17:20.000,0:17:22.000 Thank you. 0:17:22.000,0:17:24.000 (Applause)