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The two biases that keep people from saving money

first_imgThat Americans don’t save enough money is a truism. But why don’t they? The answer is a complex mix of macroeconomics (incomes have stagnated for many workers over the last few decades), culture (Americans are notoriously conspicuous spenders), and policies (two-thirds of workers are at companies without retirement plans).But another variable is the challenge of giving up the gratification of immediate spending for the security of future savings.A new paper finds that two biases prop up many people’s disinclination to save: “present bias” and “exponential-growth bias.”Present bias is a straightforward idea. People claim they’re willing to embrace all manners of self-control—saving money, working out, cleaning their room—provided that they don’t have to do so immediately. It is like the regularly scheduled conversation I have with my dentist. continue reading » 18SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblrlast_img read more