Why aren't workplace savings working?
We caught up with Sarah Holmes Berk, a leading behavioural economics researcher, to discuss how her latest project is increasing savings participation and helping workers feel more in control of their money.
Sarah - can you tell us about your journey into behavioural economics and the areas of research you contribute to at Harvard University and the National Bureau of Economic Research?
A decade ago, I was working in the economic studies program at Brookings (a US think tank). My first research project there was on the 6.5 million US state and local government workers who are not covered by Social Security. We found that their exclusion from Social Security was a source of inequity, inequality, and retirement insecurity.
From that moment, I was hooked on studying ways to help individuals to save for the future.
Behavioural economics gives us great insight into individual decision-making and ways to support healthy financial decisions. Over time, my research interests have expanded to include not just retirement security policy, but also short-term (emergency or "rainy day") savings. I'm lucky to work with amazing faculty members and research assistants on various household finance topics.
What first sparked your interest in financial wellbeing?
I grew up in a wonderful family, but one with low levels of financial education and confidence. So I've seen firsthand the stress that money can create, and how difficult it can be for households to make and stick with a plan.
I also know how financial insecurity and anxiety can trickle into every facet of a household's life and lead to poor financial decisions that snowball over time. I got very excited about working in this space after I took a seminar on economic justice in college. I'm really fortunate to work on exciting topics with wonderful partners who are dedicated to improving households' financial wellbeing and resilience.