Reports and Briefing Notes

Consumer engagement: barriers and biases

Consumer engagement: barriers and biases is sponsored by Pinsent Masons. This report is the first in a series of reports exploring consumer engagement with pensions and financial products. The report explores the reasons behind people’s decisions and the lessons behavioural economic theory offers policy-makers, particularly in relation to engagement in pension decisions.

Further reports explore policies designed to promote engagement internationally and draw out lessons for promoting better engagement in the UK, including the ways in which people engage currently and how behavioural interventions might work alongside other policy levers (defaults, compulsion, consumer protection and safety nets) to help people to achieve better outcomes from pensions.

The research as a whole is being sponsored by the Association of British Insurers (ABI), Institute and Faculty of Actuaries (IFoA), LV=, Pinsent Masons, State Street Global Advisors (SSGA), The Pensions Advisory Service (TPAS), The Pensions Regulator (TPR), The People’s Pension, and the Universities Superannuation Scheme (USS).

Chapter one describes key economic theories and reflects on how they relate to actual decision-making behaviour. It reviews the available literature on behavioural economic theory and the biases that lead to barriers to engagement and effective decision-making.  

Chapter two reflects on uses of behavioural economic theory in policy approaches, particularly in the health sector.

Chapter three explores the retirement saving decision-making process, and draws out the lessons behavioural economic theory may have for these decisions. It also explores how increased use of digital platforms could be used to enhance engagement in the future.

Executive Summary