Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87514
Authors: 
van Schie, Ron J.G.
Donkers, Bas
Dellaert, Benedict G.C.
Year of Publication: 
2012
Series/Report no.: 
Tinbergen Institute Discussion Paper 12-037/1
Abstract: 
Deciding how much to save for retirement is a difficult task that includes many uncertainties. In this paper, we use data from a representative Dutch household panel to study the impact of uncertainty regarding one's savings adequacy on retirement savings contributions and information search processes. We combine ideas from the literature in psychology and economics that provide opposing predictions regarding the impact of uncertainty on retirement savings contributions. Our results indicate that the effect of uncertainty is moderated by two factors: an individual's perceived adequacy of current savings and that individual's financial constraints. In particular, we find that uncertainty increases retirement contributions for those who believe that they save adequately; however, it hinders retirement contributions for those who believe that they save inadequately. This effect of uncertainty is further moderated by the availability of financial means: a reduction in uncertainty results in greater contributions to savings only when financial constraints are absent. We also find that uncertainty has both indirect and direct effects on savings information search. In particular, uncertainty indirectly affects savings information search because it impacts individuals' intentions to save, which consequently forces individuals to engage in purchase-oriented information search; however, uncertainty also has a direct effect because individuals engage in ongoing information search processes to directly reduce uncertainty. The implications of these findings are discussed.
Subjects: 
uncertainty
savings adequacy
retirement
financial decision making
JEL: 
D14
D83
D91
M38
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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