Three economists have come up with hard evidence: Stories really do help consumers understand retirement planning concepts.
The economists tested that idea by showing consumers a written vignette, or a video vignette, and then giving them a quiz.
The consumers who saw the annuity vignettes received an average score of 87% on the annuity quiz. Members of the control group, who received no extra information about annuities, earned an average score of 77%.
For the quiz on Social Security claiming strategies, vignettes increased the average score to 90%, from 76%.
But the vignettes had no clear effect on how likely the people exposed to the vignettes were to want to annuitize their retirement savings, or on when they said they expect to begin collecting Social Security benefits.
Anya Samek conducted the study together with Andre Gray and Arie Kapteyn.
All three researchers are affiliated with the Center for Economic and Social Research at the University of Southern California.
Their people who participated in their study were 1,808 U.S. residents ages 30 to 70.
The researchers developed two 3-minute video vignettes. Each was about a 62-year-old man and his financial advisor, and each showed the man meeting with this financial advisor to talk about plans for budgeting for his retirement. The advisor in each vignette talked about how it’s not certain how long people will live, and the consequences of a short life or a long life on retirement planning.
The researchers also prepared a written version of the videos.
Writing v. Video
The researchers found that the written vignettes were about as effective as the video vignettes at increasing people’s retirement literacy.
“However,” the researchers write in the paper, “most respondents indicate they prefer to receive the information in written form.”
A copy of the financial vignette paper is available here. At press time, the article was in front of the usual NBER paywall.
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