Nudging doesn't give poor people retirement savings, it just makes them poorer

Originally published at:


In more shocking news to capitalists, poor people aren’t inherently bad with money, they just don’t have much of it.


I hear it is all part of God’s grand plan, and they deserve their poverty apparently.


@doctorow You wrote (roughly) taking $3000 out of a paycheck per month. Is that correct? That’s 36K a year. If someone is making enough to have that much taken out per year I don’t think they are exactly poor.


Thanks for linking to the paper but that doesn’t seem to be the paper the Splinter News post is referring to. Since they are referring to WSJ article talking about the paper and I can’t access that story, I can’t tell what the actual paper is.

The paper you linked to is about how telling people how many of their peers are investing more than them affects people’s decision to take-up suggestions to contribute more to their plan.

It’s an interesting paper but not a paper stating anything about comparative levels of consumer debt, etc.


If you want to fly your fake flag, say “Nobel nominated” like a real con artist. It’s safe because:

  • Anyone of reasonable character/importance/position can suggest someone for consideration. It’s not the real end-stage nomination, but it’s fuzzy enough to fall back on.
  • The real nominations that were actually in the running for a Nobel prize are sealed for 50 years. Hard for anyone to disprove your claim.

Next: How to claim that your Z-grade movie was “Oscar eligible”.


On the one hand it is certainly true that economy-wide, all the GDP growth is being vacuumed up by an ever smaller cohort of the truly wealthy AND THAT FACT IS RUINING OUR ECONOMY. On the other hand, unless you’re living in a cardboard box, or have some sort of health crisis, it is possible to live within your means because somebody poorer than you IS managing to live within YOUR means even if they aren’t living within THEIR means. The REASON that the CEOs and shareholders have been going after pensions and health benefits with even more abandon than they target wages is that on a dollar basis, employees value them less than pay today.


No, the article says that’s the difference after four years. So after four years they’ve got $3K more for retirement, but $1500 more debt. So they’d be better off with $1500 more savings and no debt. BB’s fab editing strikes again.


We just need to clap harder for Tinklebell.

Expand social security!


I like these posts, Cory, but they always end with something like Warren 2020, and that really is not the answer. In fact it’s probably part of the problem


Indeed, $3,237 over four years would be around $67 contributed/month, no? Plus, some part of that may be contributed by the employer. (Seems like Cory would do well to correct/clarify his post, posthaste, as the mistake distracts from the point he’s making.)

1 Like

Used to work for a bank specifically for the “unbankable”. Their goal was to nudge users into saving a percentage of their income mainly for making sure that they had a buffer for when things went sideways (Flat tires, dental work, etc), so that they didn’t have to resort to horrendous “quick cash” lenders who would only make their lives worse. I agree that the first step is not dumping money into a 401K, its removing the ability to fall into life changing debt due to one accident or unforeseen issue (yes, this leads to medicare for everyone, which I am a strong supporter of).


Plus, that number doesn’t include market growth. Why wouldn’t you include that? My 401(k) gained 20% last year just from market growth.

If you can’t squeeze blood from a stone, you’re certainly not going to be able to nudge it out. It’s difficult for technocrats who are surrounded by bleeding stones in their career and social circles to understand that, though.


Heh, well they are also mostly bad with money because people are mostly bad with money at least in terms of the ability to save over decades, whether poor or not…

But the fact that this is true does not mean we can just happily let them suffer.

Or at least I can’t.

Because I’m not a monster.


My prospectus says that past returns are no guarantee of future earnings.

“Mean retirement savings of families between 56 and 61: $163,577
Median retirement savings of families between 56 and 61: $17,000”

Singles, less so. The 401k experiment has failed.


Not being able to read the paper, I can’t say why they didn’t include it. I’d guess it’s because as they always say “share prices can go down as well as up”.

Contribution amounts are at least fixed.

The point of the article is that the amount they contribute towards their pension (even with employer contribution) is less than the amount of additional debt they accrued in the same period.

Sure, the increase in their investment might make that a better proposition but since loans generally come with a definite cost (i.e. interest) and the investments are unlikely to return 20% year on year (whereas a loan could easily have 20% APR), the sensible thing to do with any extra cash is to reduce the debt.

That doesn’t appear to be happening according to the article. Instead the amount of debt is increasing.

The path to financial security is not complicated.

If you’re in debt, pay off the debt. Possible exception for a mortgage.
Pay off the debts with the highest interest first.
If you have no debt, then save.


Unfortunately, the old saw about war applies. “Everything is very simple. But even the simplest things are very difficult.”

1 Like

I was born in Hoboken, my earliest memories are of the pervasive wretchedness of daily street life, thanks for the reminder BB.

1 Like

Studies are pretty rare (for obvious reasons given the results) but the long term average earnings for 401ks in the real world just barely beat inflation. And median earnings are below average earnings. And half the people are earning less than the median. And earnings have some correlation with income (higher income people tend to get somewhat better returns in 401k plans). For over half of people 401k’s generate negligible returns. They do return a solid almost 2% a year for the finance sector though, regardless of how the market does in any particular year.


I think Cory is referring to the fact that the Econ prize is the Bank of Sweden prize and is not a Nobel foundation prize.