Promotion Jenna Barrett: “Make the future concrete for people”

Jenna Barrett is a fellow at Netspar and recently received her doctorate from Maastricht University. Her dissertation consists of five chapters that all deal with financial well-being. Two chapters contain interesting insights about retirement and how to get people engaged with financial planning.

Name: Dr. Jenna Barrett
Promotion: April 16, 2024 at the School of Business and Economics, Maastricht University
Dissertation: Money Matters: Understanding and Improving Financial Well-Being

Tell us about the starting point of your doctoral research.

“Financial well-being contributes to health, happiness and economic development. At the same time, we actually know very little about what it is. For example, the term is often used and you come across it in relation to pension funds and other financial institutions. However, you see that the way it is measured in practice varies a lot. My supervisor Lisa Brüggen had previously written a conceptual paper that elaborated on a definition of financial well-being. One of the things I then started looking at in my doctoral research was how to measure it, which is one part of my research. In another part, related to Netspar, I addressed the question of how to get people engaged with retirement planning.”

What emerged from this research?

“That is, as a pension administrator, you have to look at what exactly your context is. In doing so, there are two contexts to be distinguished: hedonic and utilitarian, or in simpler terms pleasurable and functional. In a hedonic context, the experience itself is enjoyable. You can think of Dutch amusement park “de Efteling”, where people eagerly spend a long day standing in lines for rides because the experience of being in the park makes them happy. In a utilitarian context, the experience itself is not enjoyable, but you do something because you want to achieve a specific outcome. For example, you want to enjoy a good retirement later. To do that, you first have to do less fun things like opening letters, logging in and making decisions about your retirement. Only decades later you may think how nice it is that you had your pension well arranged then.

By looking at these kinds of characteristics, you can get beyond simply finding that people are not engaged. You can then look for the various reasons why they don’t engage. For example, if the experience around a letter or the login itself is not pleasant, you can try to do something about that. Suppose the problem is that the outcomes are very distant for people, then you can explore how to make them more concrete. You can try to find inspiration in other contexts. That doesn’t mean you need all kinds of bells and whistles, like in “de Efteling”. On a more abstract level, it’s about asking: what are they doing that we can also use?”

Can you name another outcome in the area of pensions?

“For that, we have to go to another part of my research. Here we looked at standards developed in England that visualize how much money people need for a certain lifestyle after retirement. Depending on the percentage of their income they save for this, they can later afford a minimum, average or comfortable lifestyle. As examples, this includes a weekend away at home, a weekend away in Europe or a whole week away in Europe, respectively. When you show these types of consumption options, you see that people want to start saving more.

By the way, the English example cannot be literally translated to the Dutch context. Here, as a rule, you cannot choose what percentage of your income you want to save for retirement. But a broader lesson that can be drawn is that it works well to make the future concrete for people. That way, people can imagine it more and may be more involved. After all, numbers don’t mean much to them, especially when it comes to a time that is still very far in the future.”

What has Netspar brought you?

“Only at a later point in my research project did I come into contact with Netspar. I was then given the tip to present and discuss my research through the knowledge network. I ended up doing that during the Netspar International Pension Workshop and Pension Day. These meetings were very useful because of their multidisciplinary nature. In the process, as a psychologist, I received a very different set of questions than I might expect from researchers in my own field. For example, an economist asked me about interest rates and inflation. In turn, I was able to incorporate that into the next step of my research.”

Finally, did you get a good picture of financial well-being?

“I learned that in financial well-being, you have to consider people’s whole financial situation. Then it’s not just about their objective financial situation, but also how they feel about it. As in the English example, you can do things to get people to save more for retirement. Then you might think that this is always positive. However, it could also mean that the future looks so attractive that people are saving more than is convenient in their current financial situation. So they could become stressed in the present because too much money is going toward their financial future. So you, as a retirement provider, actually have to balance present and future and measure both.”

About Jenna Barrett

Jenna Barrett studied psychology at Tilburg University. “During my studies, I started focusing on economic psychology. In fact, I always found it very interesting to study how people deal with money,” Jenna says. She then went on to pursue a research master’s in social and behavioral sciences. Her research master’s led Jenna to the topic of her PhD research. “I met Lisa Brüggen during that time. We had a shared interest in people’s financial well-being and behavior. That’s when we decided we were going to do research on that.”

Want to know more?

Read Jenna Barrett’s dissertation.