Bias against action leads people to procrastinate making first-choice investments. When procrastinating, we may be sacrificing our long-term financial well-being. Individuals do not put enough effort in vital decisions.


Enrolment Study


Madrian and Shean (2011) automatic enrolment study showed people are passive about very important economic decision. Assume $410,000 is achieved when deferring taxation until money is withdrawn. Organisations offer economic contributions to their employees up to certain amount. Most companies use “opt in” saving plan where employees must enrol on their own initiative (filling a certain form). Other firms use automatic enrolment which is a default enrolment at a set contribution rate. Employees must make an extra effort if they don not want to participate in the programme.


The difference when switching between “opt out” and “opt in” options is dramatic. When participants are asked to enrol on their own, only 49% do so. In contrast, when research participants were automatically enrolled, 86% stayed in the programme and thus achieved higher economic gains.

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