A simulated financial savings task for studying consumption and retirement decision making

We describe a simulated financial decision making task that requires the participant to make decisions, over the course of a life cycle, regarding how much of their income to consume immediately and how much to save for a later retirement phase in which no income will be generated. The savings task was developed to be readily understood and performed online by members of a diverse participant population. A preliminary study (N=165) involving such a population was conducted in which performance on the savings task was observed as length of retirement phase and the presence of a consumption-smoothing goal were experimentally manipulated. Results suggested that most participants understood the task and responded sensibly; for example, they saved a greater portion of current income for later consumption when faced with a long, compared to a short, retirement phase. Responsiveness of saving levels during the task to retirement length was found to be correlated with an independent measure of participants’ financial risk attitudes. Consumption smoothing during the task was found to be correlated with a measure of individual differences among participants in temporal delay discounting. Compared to experimental savings tasks developed in previous research, the task described here may offer some practical advantages in requiring less extensive participant instructions, providing a user-friendly graphical interface, being readily performed online, and potentially being more accessible as a consequence to participants with limited education or financial sophistication.