If people just put away what's left at the end of the month, that's a recipe for failure.
Richard ThalerRetirement savings is probably behavioral economists' greatest success story. It is a prototypical behavioral-economics problem because saving for retirement is cognitively hard - figuring out how much to save - and requires self-control.
Richard ThalerThe money has to be deferred with what they call "clawback," which means they can get it back if I lose it all. So that guy making ten million a year selling credit default swaps, if we're going to keep five million of it in escrow for ten years, and with the right to go back and get it, if he starts losing money, then we're going to give people the right incentives not too take so much risk.
Richard ThalerI think we also have learned the lesson that we have to have better incentive structures.
Richard Thaler