Connecting to the Future Self: Using Web-based Virtual Reality to Increase Retirement Saving

To the extent that people can feel more connected to a vividly imagined future self, they should be motivated to save money in a long-term domain. Accordingly, in the first year of this CADMA funded project, researchers designed the software and conducted an experiment to examine the association between a vivid perception of one's self in the future and the propensity to save more for retirement. A novel technology, immersive virtual reality (VR), was developed to make one's perception of one's future self more realistic. In the first study, a control group of college undergraduates (n = 25) entered an immersive VR environment and saw a digital representation of their current selves in a virtual mirror, while the experimental group of college undergraduates (n = 25) saw an age-morphed version of their future selves in the virtual mirror. Upon exiting the VR environment, all participants were given a hypothetical money allocation task, among other tasks. The experimental condition participants were subsequently more likely to allocate money toward a hypothetical retirement savings account (M = $178.10) than control participants (M = $73.90).

Although these findings are encouraging, this approach to virtual reality is expensive and time-consuming for participants.  Thus most companies will not be able to utilize immersive virtual reality to convince their employees to adopt a longer-term perspective when making decisions about retirement savings. Thus, in the next stage of research, the researchers will focus on translating our methods and findings to more accessible formats for widespread adoption in corporate and other settings. In this proposed study, they will use the survey recruitment firm Polymetrix to recruit subjects from local community samples. For two different studies, they will recruit 160 healthy community dwelling younger (age 18-25) adults from the San Francisco Bay Area, and will include equal numbers of men and women, as well as blue and white collar workers, with occupational status determined based on the U.S. census index of occupations. All subjects will undergo a neuropsychological test battery designed to assess potentially relevant cognitive (e.g., intelligence, working memory, reversal learning) and affective variables (e.g., emotional traits, future time perspective), and will complete a measure of socioeconomic status. Researchers predict that a main effect of condition, such that participants who are exposed to their older selves will allocate more money to both hypothetical and actual retirement saving accounts. In sum, with the current grant proposal, the researchers seek to translate their previous virtual reality findings to more accessible domains. Doing so may provide a powerful new approach to address the retirement saving crisis, a crisis exacerbated by the current turmoil in financial markets. 

With regard to retirement planning, people fail to save what they need to. Economists believe that shortcomings in this domain are related to temporal discounting, or the tendency to value rewards that will occur in the future less than rewards that occur in the present. One of the reasons why such discounting occurs is because people may often have a difficult time vividly imagining future wants and desires. To the extent that people can more vividly imagine how badly they will feel in the future with little to no retirement savings, they should be motivated to save more money now. In this between-subjects study, the investigators use immersive virtual reality (VR) to help subjects vividly envision themselves in the present (control condition) or in the future (experimental condition).