As our minds turn towards the end of year break, I thought I’d give you an insight into how we are building GigSuper using the principles of behavioural economics to make it as easy as possible for you to save for your future.
Behavioural economics is incredibly useful because it can help us explain why we do things that are not in our long term best interests, and importantly how we can change those behaviours.
Every day we do things that we know are actually bad for us.
From not going to the gym (again) to ordering chips and gravy rather than steamed vegetables with that grilled chicken, we seem to be hardwired to make decisions which feel good right now, despite knowing they are not in our long term best interests.
It is the same with Superannuation.
About 75% of self-employed people don’t contribute to super, and yet we know from talking to many of you it isn’t because you don’t want to.
Everyone knows they should squirrel away money for their later years, and yet few do when they have an option to do so.
So the question for us at GigSuper is not how can we convince you to save for your retirement.
We know you already want to do that.
The question is how we can help you save for retirement?
This is where the field of behavioural economics comes in.
It might sound dull but it can change your life.
Going back to the chips and gravy -vs- steamed veges example for a moment, the effects can be seen in an experiment known as the menu experiment.
Two groups of people are given a menu with some healthy and some not so healthy (but absolutely delicious) items on it and asked to order their meal.
The difference between the two groups is that the first is given the menu the day before, the second is given to them just before they eat.
Now you would expect both groups would order the same mix of meals - right?
Wrong.
The first group, who ordered the day before, generally selected healthy meals. The group who ordered on the day were more likely to go for the not-so-healthy but delicious options.
That’s because humans find it easier to be disciplined about a decision in the future than we do in the present moment.
Similarly, when we talk about putting money aside for later in life, understanding why we make the decision we do is critical.
In designing GigSuper our objective is to help you achieve what you want to achieve - with a little nudge from behavioural economics, and building a product which makes the right decision easy.
I look forward to keeping you up to date with our progress as GigSuper takes shape early next year, and talking more about the unique features which will make it easy for you to recommit to your super.
We at GigSuper wish you a safe and peaceful holiday period and look forward to sharing our progress with you in the New Year.