Your Money
5:23 pm
Wed April 11, 2012

Your (Virtual) Future Self Wants You To Save Up

Originally published on Wed April 11, 2012 9:22 pm

A retirement crisis is looming. As people live longer, one study finds that half of all households are at risk of coming up short on retirement money. And while many working households may feel they simply don't have enough to spare for retirement, experts say some of the biggest barriers to saving up are psychological.

Now, new research has found a way around that barrier: providing a virtual glimpse into the future that could help motivate young people to save more for retirement.

Meet Your Future Self

"When you make a decision now about yourself in the future, that distant self almost feels like a stranger," says Hal Hershfield of New York University's Stern School of Business.

In fact, when we think about ourselves in the future we actually use the same part of our brain that we use when we think about a stranger. Hershfield and a group of researchers wanted to help young people vividly imagine their own old age, so they recruited college-age men and women, gave them goggles and sent them into a virtual reality laboratory where they encountered a kind of mirror.

"Just like a mirror you would see [at] the bathroom sink in the morning," Hershfield says. "And in front of them they would see an image of their future selves."

The image was digitally altered to make them look 68 or 70 years old, like special effects in a movie. Half the people in the study saw a version of their older selves while the rest saw a virtual version of their current selves. Hershfield says researchers prompted people to chat while gazing at their image, posing questions like, "Where are you from? Where did you grow up? What are your likes, dislikes, passions, hobbies?" Some participants were asked to talk about similarities they shared with the avatar.

Later, study participants were asked a series of questions about finances and retirement. Those who had seen their older selves answered that they were willing to put twice as much money into long-term savings accounts as those who had seen their current selves.

"It's fascinating. It really did have an effect," says co-researcher Laura Carstensen, who directs the Stanford Center on Longevity. She says three variations of the study yielded similar results.

"When people can really connect to themselves and say, 'That person at age 70, that's me, actually,' they tend to want to take care of that person more," Carstensen says.

Wrinkles, Jowls And Hairlines

It's an experiment you can try at home, if you dare. There are a number of online programs that age uploaded photos, but Hershfield warns that such programs use rough, generic overlays to achieve their effect. He and his fellow researchers say their aim is to create an avatar realistic (and attractive) enough for people to bond with their septuagenarian selves. To accomplish that, they used a sophisticated, time-consuming program that's now being developed for wider use.

"You need to look at things like wrinkles and jowls and hairlines and hair colors, and to do that in an automated way," says Cathy Smith of the Center for Behavioral Finance, part of Allianz Global Investors, a sister company of Allianz Life. "The idea is to create a tool that either financial advisers can use with their clients, or that could be incorporated into the services that a 401(k) plan provider offers to their clients."

Just imagine an employee orientation where you get to see yourself at 70 — now how much do you want to pony up for your 401(k)?

What Do You Want To Do When You Grow Old?

As we all live longer, Stanford's Carstensen hopes to see a cultural shift toward more long-term thinking. After all, she says, we're always asking small children what they want to be when they grow up.

"Nobody ever says to you when you're in your 20s and 30s, 'What are you going to do when you're retired?' " she says. "'What are you going to be like? What will your hobbies be?' You know, 'Where will you be traveling?' "

If we simply imagined such things, she says, we'd likely make all kinds of decisions today that would make our real future selves much happier.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

AUDIE CORNISH, HOST:

As people live longer, a retirement crisis looms. By some accounts, half of all households are at risk for coming up short on retirement money. Why? Partly because people aren't saving enough. Well, new research suggests a novel way to change that.

As NPR's Jennifer Ludden reports, it involves a virtual glimpse into the future.

JENNIFER LUDDEN, BYLINE: There are lots of reasons people don't save more, including a sense that they don't have much to spare. But some of the biggest barriers are psychological.

HAL HERSHFIELD: You know, when you make a decision now about yourself in the future, that distant self almost feels like a stranger.

LUDDEN: Hal Hershfield is with New York University's Stern School of Business. He says when we think about ourselves in the future, we actually use the same part of our brain as when we think about a stranger. Hershfield and a group of researchers wanted to help young people vividly imagine their own old age. They recruited college-aged men and women, put goggles on them, and sent them into a virtual reality laboratory where there was a mirror.

HERSHFIELD: Just like a mirror you would see in the bathroom sink in the morning. And in front of them they would see an image of their future selves.

LUDDEN: An image Photoshopped to look like they were 68 or 70, like special effects in a movie. Half the people in the study saw that. The rest saw a virtual version of their current selves. Researchers posed questions, prompting people to chat while gazing at their image in the mirror.

HERSHFIELD: Where are you from? Where did you grow up? What are your likes, dislikes, passions, hobbies, etc.

LUDDEN: Later, these people were asked a series of financial questions and those who saw their older selves were willing to put twice as much money into a long-term savings account.

LAURA CARSTENSEN: It's fascinating. It really did have an effect.

LUDDEN: Co-researcher Laura Carsensen is with the Stanford Center on Longevity. She says three variations of the study had similar results.

CARSTENSEN: When people can really connect to themselves and say, that person at 70 -that's me, actually, they tend to want to take care of that person more.

LUDDEN: This is actually an experiment you can try at home, if you dare.

All right. Here we go. Submit.

A number of online programs use rough overlays to age a photograph. I used April Age and, in about two minutes...

OK. I'm sliding toward 72. Uh-oh. Oh, no.

I dragged the slider forward three decades, watching my face get blotchy, puffy and wrinkly.

Oh, bad.

It's pretty scary, but researchers say that's not their goal. They want avatars realistic enough for people to bond with their septuagenarian selves and they used a sophisticated time-consuming program to create them. Now, there's an effort to develop that for wider use.

CATHY SMITH: So you need to look at things like wrinkles and jowls and hairlines and hair colors and to do that in an automated way.

LUDDEN: Cathy Smith is with the Center for Behavioral Finance, part of Allianz, the life insurance company. She sees potential.

SMITH: The idea is to create a tool that either financial advisors can use with their clients or that could be incorporated into the services that a 401K plan provider offers to their clients.

LUDDEN: Think employee orientation at a new job. See yourself at age 70. Now, how much do you want to pony up for your 401K?

As we all live longer, Stanford's Laura Carstensen hopes to see a cultural shift toward more long-term thinking. She says we ask small children all the time, what do you want to be when you grow up?

CARSTENSEN: Nobody ever says to you, when you're in your 20s and 30s, what are you going to do when you're retired? What are you going to be like? What will your hobbies be? You know, where will you be traveling?

LUDDEN: If we simply imagined such things, she says, we'd likely make all kinds of decisions today that would make our real future selves much more happy.

Jennifer Ludden, NPR News, Washington. Transcript provided by NPR, Copyright NPR.