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Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self

Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self

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Abstract: Many people fail to save what they will need for retirement. Research on excessive discounting of the future suggests that removing the lure of immediate rewards by precommitting to decisions or elaborating the value of future rewards both can make decisions more future oriented. The authors explore a third and complementary route, one that deals not with present and future rewards but with present and future selves. In line with research that shows that people may fail, because of a lack of belief or imagination, to identify with their future selves, the authors propose that allowing people to interact with age-progressed renderings of themselves will cause them to allocate more resources to the future. In four studies, participants interacted with realistic computer renderings of their future selves using immersive virtual reality hardware and interactive decision aids. In all cases, those who interacted with their virtual future selves exhibited an increased tendency to accept later monetary rewards over immediate ones.
Abstract: Many people fail to save what they will need for retirement. Research on excessive discounting of the future suggests that removing the lure of immediate rewards by precommitting to decisions or elaborating the value of future rewards both can make decisions more future oriented. The authors explore a third and complementary route, one that deals not with present and future rewards but with present and future selves. In line with research that shows that people may fail, because of a lack of belief or imagination, to identify with their future selves, the authors propose that allowing people to interact with age-progressed renderings of themselves will cause them to allocate more resources to the future. In four studies, participants interacted with realistic computer renderings of their future selves using immersive virtual reality hardware and interactive decision aids. In all cases, those who interacted with their virtual future selves exhibited an increased tendency to accept later monetary rewards over immediate ones.

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Published by: Russell Sage Foundation on Jun 07, 2012
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HAL E. HERSHFIELD, DANIEL G. GOLDSTEIN, WILLIAM F. SHARPE, JESSE FOX,LEO YEYKELIS, LAURA L. CARSTENSEN, and JEREMY N. BAILENSON
Many people fail to save what they will need for retirement. Researchon excessive discounting of the future suggests that removing the lureof immediate rewards by precommitting to decisions or elaborating thevalue of future rewards both can make decisions more future oriented.The authors explore a third and complementary route, one that dealsnot with present and future rewards but with present and future selves.In line with research that shows that people may fail, because of a lackof belief or imagination, to identify with their future selves, the authorspropose that allowing people to interact with age-progressed renderingsof themselves will cause them to allocate more resources to the future. Infour studies, participants interacted with realistic computer renderings oftheir future selves using immersive virtual reality hardware and interactivedecision aids. In all cases, those who interacted with their virtual futureselves exhibited an increased tendency to accept later monetary rewardsover immediate ones.
Keywords 
:
retirement saving, temporal discounting, future self-continuity,immersive virtual reality, intertemporal choice
IncreasingSavingBehaviorThroughAge-ProgressedRenderingsoftheFutureSelf
Although the age associated with retirement is 65 in theUnited States, people are expected to live approximately
*Hal E. Hershfield is Assistant Professor of Marketing, New York Uni-versity (e-mail: hhershfi@stern.nyu.edu). Daniel G. Goldstein is AssistantProfessor of Marketing, London Business School, and Principal ResearchScientist, Yahoo Research (e-mail: dgg@yahoo-inc.com). William F.Sharpe is STANCO 25 Professor of Finance, Emeritus, GraduateSchool of Business, Stanford University (e-mail: wfsharpe@stanford.edu).Jesse Fox is Assistant Professor of Communication, School of Com-munication, Ohio State University (e-mail: fox.775@osu.edu). LeoYeykelis is a doctoral student, Department of Communication, Stan-ford University (e-mail: yeyleo@stanford.edu). Laura L. Carstensen isFairleigh Dickinson, Jr. Professor of Public Policy and Professor of Psychology, Department of Psychology, Stanford University (e-mail:laura.carstensen@stanford.edu). Jeremy N. Bailenson is Associate Profes-sor of Communication, Department of Communication, Stanford Univer-sity (e-mail: jbailenson@stanford.edu). This research was supported by aRussell Sage Behavioral Economics Roundtable grant and U.S. NationalInstitute on Aging funding through the Center for Advancing DecisionMaking in Aging at Stanford University (Grant P30 AG024957) to thefirst and last authors, as well as a National Science Foundation grant (HSD0527377) to the last author. The authors thank Brittany Billmaier, DeonneCastaneda, Michelle Del Rosario, Shaya Fidel, Felicity Grisham, andAmanda Le for research assistance and Russell Foltz-Smith and ChinthakaHerath for technical assistance. Eldar Shafir served as associate editor forthis article.
16 years in retirement on average (Arias 2007), whichreflects a gradual increase in retirement length observedsince the nineteenth century (Lee 2001). Unfortunately,with this prolonged amount of time spent in retirement,people run the risk of outliving their money or undergoinga sudden decrease in quality of life. Using data from the2004 Survey of Consumer Finances, Munnell, Webb, andGolub-Sass (2007) calculate a benchmark replacement ratefor each household and find that 43% of households fell atleast 10% short of reaching target replacement rates. Whentaking into account the recent financial crisis, the retire-ment picture grows even bleaker. Using the same bench-mark replacement rate, Munnell, Webb, and Golub-Sass(2009) find that a few years later, the percentage of house-holds that would fall short of reaching their retirement goalshad grown to 51%. Moreover, the McKinsey Global Insti-tute (2008) observes that fully two-thirds of early babyboomers (born between 1945 and 1955) do not have theresources to maintain their preretirement standards of liv-ing in retirement, perhaps resulting from their inabilityto forecast the consequences of their investment decisions(Goldstein, Johnson, and Sharpe 2008). Such a lack of pre-paredness is particularly problematic in the United Statesgiven the status of the already weakened Social Securitysystem. In the words of Federal Reserve Chairman Ben
© 2011, American Marketing AssociationISSN: 0022-2437 (print), 1547-7193 (electronic)
S23
 Journal of Marketing Research
Vol. XLVIII (Special Issue 2011), S23–S37
 
S24 JOURNAL OF MARKETING RESEARCH, SPECIAL ISSUE 2011
Bernanke, “The arithmetic is, unfortunately, quite clear”(Chan and Hernandez 2010). Thus, to avoid overwhelmingbudget cuts, saving behavior needs to change.Discounting of the future has long been described asexponential in economic models (e.g., Samuelson 1937),but recent behavioral research suggests that it is bet-ter explained by a hyperbolic or quasi-hyperbolic func-tion in certain situations (Kirby and Marakovic 1996;Laibson 1997; Laibson, Repetto, and Tobacman 1998;Strotz 1956; Zauberman et al. 2009). In particular, ratherextreme discounting is believed to occur in situations inwhich immediate gains (as opposed to short-term gains) aretraded off against long-term ones (Chapman 1996; Fred-erick, Loewenstein, and O’Donoghue 2002; Laibson 1997;O’Donoghue and Rabin 1999). Such steep discounting isbelieved to lead to decisions that would be rejected withenough planning (Hoch and Loewenstein 1991; Lynch et al.2010), and failure to save for retirement is considered aprototypical example of discounting to excess (Diamondand Köszegi 2003; Laibson, Repetto, and Tobacman 1998).Two broad types of remedies aim to increase saving andreign in excessive discounting (for a review of other inter-ventions in multiple domains, see Ho, Lim, and Camerer2006). Remedies of the first type reduce the lure of imme-diacy and the amount that can be consumed in the presentthrough precommitment to starting to save at a later date(e.g., Thaler and Benartzi 2004). Precommitment involvesany device that consumers use to enact constraints in thepresent to limit undesirable (or promote desirable) behav-iors in the future (Ariely and Wertenbroch 2002). Elster(1977) highlights the example of Ulysses tying himself tothe ship mast so that he could listen to the Sirens’ songswithout jumping overboard, and Schelling (1983) notesthat alcoholics take the drug Antabuse to help them avoidengaging in future drinking. To this end, several companieshave successfully implemented programs that use precom-mitment strategies that allow employees to commit futureincome to retirement plans (e.g., Choi et al. 2006; Thalerand Benartzi 2004).Remedies of the second type increase the appeal of wait-ing to spend and the expected enjoyment of future spendingby directing people’s imagination to future uses for money.If consumers are often insensitive to the ways present con-sumption necessarily limits their ability to spend moneylater on (Frederick et al. 2009), this may be due to theirfailing to understand the positive future consequences of waiting (Nenkov, Inman, and Hulland 2008; Nenkov et al.2009). Indeed, prior research has shown that interventionsthat encourage people to elaborate on future outcomes andconsider future uses for money to increase patience onintertemporal choice tasks (e.g., Weber et al. 2007).In this article, we explore a third and complementaryroute, one that deals not with present and future rewardsbut with the connection between present and future selves.In line with research that shows that people may failto identify with their future selves because of a lack of belief or imagination (Parfit 1971; Schelling 1984), we pro-pose that having people interact with photorealistic age-progressed renderings of themselves will cause them toallocate more resources to the future. In four studies, partic-ipants interacted with computer-generated representationsof their future selves using immersive virtual reality hard-ware and interactive decision aids before making decisionsabout whether to consume in the present or future.
FUTURE SELF-CONTINUITY Theoretical Foundations and Empirical Evidence
Philosophers, psychologists, and economists argue thatan important determinant of intertemporal choice is a per-son’s sense, or lack thereof, of psychological connectionwith his or her future self (Ainslie 1975; Elster 1977;Parfit 1971, 1987; Schelling 1984; Strotz 1956; Thaler andShefrin 1981). Psychological connectedness is believed tovary with respect to the age difference between different“selves,such that a person might feel more connectionwith his or her future self in one year than in 40 yearsand, accordingly, might care less about a distant self (Parfit1971). At the extreme, with a total lack of psychologicalconnectedness, a person’s future self might seem like adifferent person altogether. As Butler (1736, p. 344) firstnoted, “if the self or person of today, and that of tomorrow,are not the same, but only like persons, the person of todayis really no more interested in what will befall the person of tomorrow, than in what will befall any other person.” Parfit(1987, pp. 319–20) expands on this concept, as follows:
If we now care little about ourselves in the fur-ther future, our future selves are like future genera-tions. We can affect them for the worse, and, becausethey do not now exist, they cannot defend them-selves. Like future generations, future selves have novote, so their interests need to be specially protected.Reconsider a boy who starts to smoke, knowingand hardly caring that this may cause him to suffergreatly fifty years later. This boy does not identifywith his future self. His attitude towards this futureself is in some ways like his attitude to other people.
To people estranged from their future selves, saving islike a choice between spending money today or giving itto a stranger years from now. Presumably, the degree towhich people feel connected with their future selves shouldmake them realize that they are the future recipients andthus should affect their willingness to save. We hold theview that it is not important whether in various senses, aperson
actually
changes over time. Although trait-level per-sonality characteristics (Roberts and DelVecchio 2000) andgeneral interests (Low et al. 2005) remain relatively con-stant over the course of a lifetime, the body’s cells turnover, and attributes as personal as names, noses, and rep-utations can be willfully altered beyond recognition. Whatmatters, however, in the sense of the law, is that one per-son has but one identity, and with this essential link, theassets of the present and future selves are yoked together.Similar to Parfit (1987), we hypothesize that people who
 feel
as though the future self is a different person fail toacknowledge this connection, that is, fail to
identify
withthemselves in the future.Do people think of the future self as a different person?Research has demonstrated that people make attributionsabout the future self in the same manner as they do for oth-ers, by attributing the future self’s behavior to dispositionalfactors rather than situational ones (Pronin and Ross 2006;Wakslak et al. 2008), and make decisions for the future
 
Increasing Saving Behavior S25
self using a similar process they use to make decisionsfor other people (Pronin, Olivola, and Kennedy 2008). Onan implicit level, Ersner-Hershfield, Wimmer, and Knutson(2009) show that thinking about the future self elicits neuralactivation patterns that are similar to neural activation pat-terns elicited by thinking about a stranger. More important,the degree to which people report feeling connected withtheir future selves is related to their intertemporal decisionmaking. For example, Ersner-Hershfield et al. (2009) findthat higher levels of future self-continuity are positivelyassociated with financial assets, and Bartels and colleaguesshow that perceived connectedness with the future self ispredictive of choices on several different temporal discount-ing tasks (Bartels and Rips 2010) and distinct from otherconstructs related to temporal preference, such as presentbias (Bartels and Urminsky 2011). Moreover, in their neu-roimaging study, Ersner-Hershfield, Wimmer, and Knutson(2009) demonstrate that participants who showed the great-est neural activation differences between thoughts about thecurrent self and thoughts about the future self also showedthe steepest discount rates.
 Increasing Connectedness with the Future Self 
Parfit (1987, p. 161) remarked that neglecting the futureself might be “caused by some failure of imagination, orsome false belief.The notion of a future self presentsmany challenges to the imagination. With the countlessdirections a life and appearance could take, a person mightbe unsure with which among this infinity of future selvesto identify. The multiplicity of possible future selves isacknowledged by Parfit, who cites Proust ([1927] 1981,p. 631) to illustrate this point: “We are incapable, whilewe are in love, of acting as fit predecessors of the personwhom we shall presently have become and who will be inlove no longer.” Similarly, a composite representation of allfuture selves would necessarily be impoverished, and thequest to identify a singular image may result in indecisionor lack of confidence about what the future holds.Parfit (1987, p. 161) also observes that “when we imag-ine pains in the further future, we imagine them lessvividly, or believe confusedly that they will somehow beless real, or less painful.” In line with this sentiment, recentresearch has argued that consumers suffer “empathy gaps”and may misunderstand how they will feel in the futureabout decisions they make in the present (Loewenstein,O’Donoghue, and Rabin 2003; Wilson and Gilbert 2005).Loewenstein (1996) theorizes that a more vivid impressionof oneself engaging in some action in the future mightintensify the emotions that are linked to thinking aboutthat scenario. These intensified emotions might, in turn,enable a person to be better informed about the futureconsequences of a present decision. For example, pulmo-nologists tend to smoke less than other doctors, perhapsbecause seeing blackened and withered lungs on a dailybasis increases the negative emotions associated with smok-ing (Loewenstein 1996).
 AGE-PROGRESSED EMBODIMENTS OF THE FUTURE SELF 
To the extent that people can feel more connected witha vividly imagined future self, they should be motivated tosave more money for the future. Accordingly, in what fol-lows, we examine the association between seeing an embod-iment of one’s self in the future and the propensity to savefor retirement or accept later monetary rewards over imme-diate ones. Although philosophers and psychologists haveused the term “embodied” to signify that organisms areinfluenced by their own physical, incarnate bodies (Lakoff and Johnson 1999), we borrow the term from virtual realityliterature, in which it is associated with a particular visualor otherwise perceivable representation of a body. As Lanier(1992) notes, a perceivable embodiment helps forge an asso-ciation with the self in a digital environment.In this research, we present people with renderings of their future selves made using age-progression algorithmsthat forecast how physical appearances will change overtime. People are capable of imagining their future selvesat any time, so why should the presentation of renderingslead to different behavior than that resulting from day-to-day imagination? We suspect several reasons for this dif-ference. First, though capable, people may not ordinarilyelect to imagine their future selves. Second, even if peopleoften imagine their future selves, they may not be imag-ining themselves at a distant retirement age. Third, imag-ination of the future may be propositional (“I will haveenough money to leave to my children”) rather than visual;vivid visual imagery is believed to exert strong influenceson preferences and memory (Loewenstein 1996; Standing1973). Fourth, as we discussed, an imagined self may beuncertain, vague, and probabilistic; in contrast, a computer-ized rendering is definite and specific. Fifth, because peoplemay have variable confidence in their abilities to imag-ine their future selves, renderings created by an objectiveforecasting model may be viewed as more authoritative.Last, as Parfit (1971) notes, neglect of the future self canarise from a failure of the imagination. Because imagina-tion from the starting point of a graphical rendering mayrequire less effort and attention than imagination from ablank slate, people may more easily imagine the futureself when seeded with an image based on their presentappearance (as the renderings in the experiment are). Thesestudies were motivated, in part, by others who have usedvirtual reality as a tool (Blascovich and Bailenson 2011)to influence consumer behavior (Ahn and Bailenson, inpress), health behavior (Fox and Bailenson 2009), financialdecision making (Yee and Bailenson 2007), and memory(Segovia and Bailenson 2009).Our work adds to a growing body of literature that exam-ines effective interventions for increasing saving behavior.Whereas previous work has explored how both changingone’s environment in advance (Ariely and Wertenbroch2002) and elaborating on potential outcomes can lead tomore patient intertemporal choices (Nenkov, Inman, andHulland 2008; Nenkov et al. 2009), our manipulations takean earlier starting point. Instead of altering the way con-sumers think about future rewards, the manipulations pre-sented here seek to aid consumers in imagining the futureself who will benefit (or suffer) from the outcomes of deci-sions made today.
OVERVIEW 
We incorporated a variety of novel technologies in thecurrent studies, including immersive virtual reality. Blas-covich and Bailenson (2011) demonstrate the utility of this

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