The Pension PlayPen coffee morning on Tuesday 7th January was a father and son act with Arun and Sid Muralidhar talking with us.
Here is the video
We were delighted to hear Dr Arun Muralidhar and his son outlining a recent paper on Risk Preferences. The link to the paper is here:
Some of you have kindly taken part in the survey already but if you wish to (anonymously) then click here:
https://forms.gle/
Please join the discussion and hear the results which could have a big impact on DC design going forward. What follows is froom Arun Muralidhar
Here are some of the big findings.
1. Used 14 of Kahneman-Tversky’s original questions. Weirdly, our aggregate responses matched just 43% of KT’s aggregate responses (which was the foundation stone of hashtagBehavioralFinance)!! YIKES!!
2. Age: NO significant difference in mean risk preferences among our big three age groups (under 25, 25-65, over 65). Reinforces my bias that hashtagTDFs and age-based cohort hashtagretirement planning is nonsense as these products are not focused on participants’ goals/preferences.
2. Gender: Women in this sample are more risk-seeking on Losses. Maybe less likely to buy annuities?
3. hashtagFinancialLiteracy and Education: Education matters more for preferences than FinLit.
4. Political Leaning: Liberals and Conservatives should be getting along as no differences in risk preferences. Those who refused to identify their leanings (or “Other”) are meaningfully different.
5. Geography: MATTERS! N. America (US), different from S. America (Brazil), different from UK, EU and Asia (India). So stop importing American theory and practice on retirement planning.Basically, as we move to DC globally, design a system that fits the risk preferences of your country. AND ensure individualization of solutions as each of us is unique!!
