Freedom of Choice in pensions: How our brains react to pension choices

  • Joyce Vonken Joyce Vonken
  • Walter Limpens Walter Limpens

This neuromarketing research gives a new, more nuanced perspective on the question whether consumers desire freedom of choice with respect to their pensions/retirement outcomes. The research shows, making use of fMRI-technology, that people intuitively experience a more negative emotional balance when they are confronted with pension choices compared to when their pensions are arranged automatically for them. This could be a good explanation for why the use of current pension choices is rather low in the Netherlands. What is interesting however, is the fact that when consumers have to emotionally value the pension outcomes that they get from making a choice, versus outcomes that are automatically arranged for them, consumers experience a more positive emotional balance when evaluating pension outcomes that they have chosen for themselves, even if the outcome is exactly the same as the automatically arranged outcome. Providing people with choices with respect to their pension can have positive effects; pensions will be better adapted to the financial and consumption preferences of consumers. And, as this research shows, higher emotional value can be the result of having chosen your pension yourself. To realize these positive effects it is however very important to stimulate consumers to make pension choices, by eliminating the negative emotional barriers that people experience when  they are confronted with pension choices. Choice architecture plays an important part here. The research offers some tips on choice architecture as well.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.


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