Female Dartmouth employees are more likely than their male counterparts to save for retirement, despite health concerns and the costs of supporting a family, according to a recent study conducted at the Tuck School of Business. The study, authored by Tuck professor Punam Anand Keller and Dartmouth economics professor Annamaria Lusardi, also found that female College employees are more likely than men to change their financial behavior when given professional advice.
Keller and Lusardi drew these results from a survey administered to approximately 800 Dartmouth employees since August of 2006. All new employees attending orientation programs were invited to take the survey, she said.
The goal of the study was to design strategies to motivate College employees to contribute to retirement pension programs, Keller said.
"We wanted to see if we could use social marketing techniques to encourage new employees to sign up voluntarily for a supplementary retirement account," she said.
The study is ongoing, but much of the data has already been analyzed, Lusardi said.
Social marketing techniques -- Keller's academic area of expertise -- include defining a group's barriers to decision-making and designing programs tailored to each group's needs, Keller said.
"I was interested in seeing if we could encourage corporations and organizations to market to their employees the same way they market to their customers," she said. "Corporations ask what their customers need, divide them into groups and design products for those groups. Why can't we do that for employees?"
To determine employees' financial barriers, the survey asked participants to select the most difficult parts of their savings decisions from a group of options, including having too much or too little savings information, not enough financial knowledge and not knowing where to start when it comes to retirement savings, Lusardi said.
"These are all very important things to consider," she said. "We found that financial literacy is very low, particularly among women."
Women also listed unexpected family expenses and not being able to meet medical costs as concerns with retirement savings, Keller said.
"Most people are terrified that they won't have enough retirement savings to cover their health costs," she said. "It's exciting to look at financial planning holistically, as a combination of health and wealth."
Employees listed family, colleagues and friends as the most important source of information when making savings or investment decisions, Lusardi said.
"Because of these results, perhaps the best way to provide financial information to employees is to use these sources," she said. "If you usually take advice from colleagues, then why don't we interview your colleagues and let them tell everyone how they saved?"
Keller, whose research focuses on health and financial wellbeing, said she has found that hearing personal stories regarding financial planning changes people's behavior more effectively than reading statistics. Data from the study was gathered anonymously, she said, but taped interviews in which four College employees discuss their financial strategies are available on the College web site.
"Rather than providing statistics, we actually provided testimonials from other Dartmouth employees so people could see what others have done," Lusardi said.
Tuck Director of Admissions Dawna Clarke said in the video that as a single mother, college savings and retirement plans were important considerations for her.
"I do try to budget so that I have an emergency fund and make sure that retirement savings and college savings are just part of the ordinary, every-month bills that I'm paying," Clarke said.
The study also found that women think they will need more money to retire in order to pursue hobbies and other interests, Keller said.
"The biggest dream that I have is that I don't want to feel stuck, like I have to work," Clarke said in the interview. "I want to have the ability to choose."
Keller said she hopes the videos will encourage College employees to evaluate their own financial plans.
Lusardi, who is currently conducting a debt literacy study at Harvard Business School, said she hopes to launch a financial literacy initiative based on her and Keller's findings when she returns to Dartmouth in December.
"We need to recognize that many people know very little about savings, but we're giving them big decisions to make," she said. "It's an obstacle we need to remove."
Results from the study will also be published in Lusardi's upcoming book, "Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs," scheduled to be released in 2009.
Keller and Lusardi each said Adam Keller, Dartmouth's executive vice president for finance and administration, was incredibly supportive of the administration of the survey.
"I think we are very fortunate to get the support from the College that we did," Lusardi said. "It was a great collaboration."
