AEGON UK and the Association of Independent Financial Advisers have come together to explore some of the behavioural nudges which could help move the UK towards a culture of saving.

 
“Saving Britain” (1) points out that until recently, initiatives to encourage saving have come through tax and regulation and assumed a rational consumer. But a combination of regulatory complexity and cost, alongside a consumer with a preference for consumption has meant that we are not saving as much as we should.

The report makes a number of recommendations including that we should move towards a culture of “save back” not “cash back“, that there is a need to build a savings culture in the young and there is a need for a new advice infrastructure.The report points to auto enrolment as an example of a move towards behavioural finance and notes that it highlights a change in the approach of Government.

Without a doubt behavioural economics could be used to help us save more. Despite the credit crunch it remains easier to borrow or spend than to save. And the credit industry have for many years used behavioural nudges to encourage us to borrow.
 
The new Government will undoubtedly be interested in this report and its arguments. David Cameron has expressed an interest in using behavioural economics to influence behaviour. But this report is arguably just a starting point for encouraging thinking in this area. Of course the responsibility for many of the solutions to encourage us to save have to lie with the savings industry (with a little help from Government to remove the “anti-nudges“). Industry need to research and pilot new approaches to influencing behaviour. Those companies who come up with the right nudges are likely to see a financial reward for their investment.
 
David Sinclair
 
(1) http://www.aegon.co.uk/media/press-releases/press-releases-2010/AIFA-and-AEGON-call-for-action-to-rebuild-Britains-savings-culture/index.html