I
am Associate Professor of Finance at Maastricht
University and Open University, and affiliated
with Netspar. My research focuses on behavioral
household finance. I am interested in (1)
understanding households' financial decisions
(e.g., saving, asset allocation, trading, and
annuitization decisions) and (2) designing
nudges and interventions to change households'
financial decisions (e.g., pension
communication, product design).
With
this approach I aim to cover the complete
financial decisions-making journey across the
life cycle, starting from engagement (collecting
information, planning), accumulating savings
(how much and where to invest), and finally the
decumulation of pension assets. Let me
illustrate this approach with a few examples:
Engagement
The
earlier one starts planning for retirement to
better – more time is available to build up a
sufficient retirement nest egg. But, very few
people are busy with doing so, especially in
below the age of 50. To better understand this
lack of engagement we fielded a survey with
members of a pension plan – figuring out how
cognitive and emotional factors relate to the
willingness to gather pension information. Then,
we used that knowledge to design email
communications for two pension funds based on
classical behavioral techniques – goal framing
and social norms. In both cases, members of
those funds receiving the new communication were
twice as likely to become active and inform
themselves about their expected pensions.
Accumulating
savings
Many
people save insufficiently for reaching an
adequate life style in retirement. In several
studies, we explored how individual factors such
as financial literacy and knowledge, cognitive
ability, subjective age identity, ability to
imagine being in retirement relate to savings
decisions. Then, in a series of experiments, we
tested what we can do to increase the amount
that people are willing to save. The
intervention that finally worked was the
following: We translated abstract pension income
numbers into concrete example of shopping
baskets. That is, we showed people what goods
and services different pension incomes can buy.
By doing that, those abstract numbers became
concrete things that people could relate to, and
they were more willing to save for retirement.
Investing
savings
Investing
in stocks for retirement is often recommended as
in the long-term, even though stocks are
volatile, they earn more return than a bank
account. But, retail investors that in principle
make the right decision and buy stocks then
often “overdo” it. They frequently trade and
turn their portfolio (wrongfully assuming they
have stock picking and market timing skills).
Ultimately, their net returns get hurt by the
transaction fees accumulated. To better
understand this behavior, we used trading data
from an online brokerage that we enriched with
survey data on those traders’ expectations of
returns and risk over time. We then designed an
intervention that changed the way that investors
in an experiment saw their performance (to long
term past returns). In response, investors less
often changed their opinion about where the
market would move to – which we belief will
reduce their trading frequency.
Decumulating
pension assets
When
(successful) savers arrive at the end of their
working careers they wonder – what to do now
with this money? Shall I regularly pay me an
income from those assets and what income per
month can I afford to not risk running out of
money too soon. This is a difficult problem to
solve and economists often recommend buying an
annuity. An annuity is a pension product that
guarantees a lifelong income. However, in
reality annuities are rarely bought. We looked
into this issue by studying how people make
sense of annuities, that is, how they
financially value them. We figured out that for
many people an annuity is too complex to do the
math and also for those who do the math, they
underestimate the annuity’s financial value.
But, we discovered the formula that people used
to do the math in our study! We then designed an
intervention that gave people “the number” to
use in their back-of-the-envelope formula. Their
valuations became more realistic and their
interest in annuities went up.
Positions Held
- since 2023 Maastricht
University, Associate
Professor of Finance
- since 2023
Director, Marketing-Finance
Exchange Center of Excellence
- since 2019 Open University, Associate
Professor of Finance
- 2009 - 2022
Maastricht
University, Assistant
Professor of Finance
- since 2009 Netspar,
Research Fellow
- June 2013
University of British Columbia, Visitor
- July 2011
University of New South Wales, Visiting
Fellow
- 2006 – 2009
Dr.
Wolfgang Schieren Chair for Insurance and
Risk Management,
Humboldt-Universität zu Berlin, Post-Doc (Habilitand);
C.A.S.E. -
Center for Applied Statistics and Economics;
Collaborative
Research Center 649
- August 2006 – December 2006
University
of Illinois at Urbana-Champaign, Visiting
Assistant Professor of Finance
- 2003 – 2006
Dr.
Wolfgang Schieren Chair for Insurance and
Risk Management,
Humboldt-Universität zu Berlin, PhD student
- 2002 -
2003 KPMG (Insurance Audit)
Education
- Habilitation,
Humboldt-Universität zu Berlin, 2009
- Dr. rer. pol.,
Humboldt-Universität zu Berlin, 2006, Title
of dissertation thesis: Optimale
Altersvorsorgestrategien: Eine
Lebenszyklusanalyse (Optimal Financial
Planning Strategies: A Life-Cycle Analysis),
abstract
- Diplom-Kaufmann,
Humboldt-Universität zu Berlin, 2001
Key Publications
- Guessing, math or
something else? Lay people’s processes for
valuing annuities, Journal of
Behavioral Decision Making, 2022
(accepted for publication)
- Exploring the First Steps
of Retirement Engagement: A Conceptual
Model and Field Evidence, Journal
of Service Management, 2022, Vol. 33,
1-26 (with
Wiebke Eberhardt, Lisa Brüggen, and
Chantal Hoet)
- Engagement behavior and
financial well-being: The effect of
message framing in online pension
communication, International
Journal of Research in Marketing,
2021, Vol. 38, 448-471 (with
Wiebke Eberhardt,
Lisa Brüggen, and Chantal Hoet)
- What Age Do You Feel? -
Subjective Age Identity and Economic
Behaviors, Journal of Economic
Behavior & Organization,
2020, Vol. 173, 322-341 (with
Zihan
Ye)
- Reverse Mortgages: What
Homeowners (Don’t) Know and How it Matters, Journal of Economic
Behavior & Organization, 2017,
Vol. 133, 151-171 (with
T. Davidoff and P.
Gerhard)
- Self-Attribution Bias in
Consumer Financial Decision-Making: How
Investment Returns Affect Individuals’
Belief in Skill, 2014, Journal
of Behavioral and Experimental Economics,
Vol. 52, 23-28 (with Arvid O. I. Hoffmann)
-
The
Impact of Investment Behavior for
Individual Welfare, Economica,
2014, Vol. 81, 15-47 (with
Helmut Gründl, Joan T. Schmit and Anja
Zimmer)
- Longevity
Risk, Subjective Survival Expectations,
and Individual Saving Behavior, Journal of Economic
Behavior & Organization, 2013,
Vol. 86, 200-220 (with Katja
Hanewald)
- Individual
Investor Perceptions and Behavior During
the Financial Crisis, Journal of Banking
& Finance, 2013, Vol. 37, 60-74
(with Arvid O. I.
Hoffmann and Joost M. E. Pennings)
Working
Papers
- Cognitive constraints,
planned savings and downstream economic
behaviors (with Zihan Ye, Xiaopeng
Zou, and Shenglan Chen)
- When, how and for
whom evaluative labels and consumption
baskets increase pension savings (with
Jenna Barret, Lisa Brüggen, and Peiran
Jiao)
- Norms in Behavioral
Interventions: Peer or Anchoring Effects?
(with
Pieter F. E.
Verhallen, Lisa Brüggen, and Gaby
Odekerken-Schröder)
- Friends with
Benefits: Strengthening Peer Effects
through Aligning Consumer Traits with
Reference Group Attributes (with
Pieter F. E.
Verhallen, Lisa Brüggen, and Gaby
Odekerken-Schröder)
- The U-Turn Effect in
Social Norm Interventions:
Individual-to-peer Behavior Gap as
Endogenous Driver of Social Identification
with Peers, and its Consequence on Peer
Effects (with
Pieter F. E.
Verhallen)
Media Coverage
- Interviews: Broadcast
Retirement Network (TV) 4/2022; Broadcast
Retirement Network (TV)
5/2021; Netspar podcast
12/2020; L1 Radio, 11/2019; L1 Radio,
9/2019; Geldgids 6/2017, p. 19; Limburg
Onderneemt, Sep-2014, p. 5
- What Age Do You Feel? -
Subjective Age Identity and Economic
Behaviors: Canadian
Investment Review, Apr-2020
- Engaging pension plan
participants: challenges and insights
(conference): De Limburger,
Dec-14-2016, p. 16
- Segmentation of pension
plan participants - Identifying dimensions
of heterogeneity: De Limburger,
Mar-9-2016; Pensioen
Pro, Jan-27-2016
- Reverse Mortgages: What
Homeowners (Don’t) Know and How it
Matters:
ReverseMortgageDaily, Sep-27-2015
- Self-Attribution Bias in
Consumer Financial Decision-Making: How
Investment Returns Affect Individuals’
Belief in Skill: Investor's Chronicle,
Mar-17-2022; Fidelity Personal
Investing, Jun-19-2015; DER STANDARD,
Jul-18-2014; Irish Times,
Jun-10-2014; De Telegraaf, Jun-7-2014, p.
25; de Volkskrant, Jun-3-2014, p. 24; De
Limburger, Jun-3-2014, p. B14; New York Times,
Mar-10-2014; The Star Online,
Jan-16-2014; Thomson Reuters
International Financing Review online,
Jan-15-2014; The Globe and Mail,
Jan-9-2014
- How Return and Risk
Experiences Shape Investor Beliefs and
Preferences: Geldgids, Jun-2012,
p. 7;
Wirtschaftswoche, Apr-22-2012;
Handelsblatt,
Apr-19-2012, p. 18 (online
version of article); DeGids.fm
(Radio 1), Jan-23-2012; De
Pers, Jan-17-2012, p. 9; De
Limburger, Jan-10-2012, p. B14; Maastricht
Aktueel, Jan-9-2012; Carp,
Jan-9-2012
- Individual
Investor Perceptions and Behavior During
the Financial Crisis:
MarketMinds, Feb-11-2010
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