In Thinking Fast and Slow Kahneman explains that people can sometimes save less because they underestimate the future benefit to themselves because they view present and future self differently. I learned elsewhere that this cognitive bias is called hyperbolic discounting. If I understand correctly this will affect young more than old because old person's future self is much closer to present self.

My question:

Are there any other cognitive biases that might decrease saving? Also, are there some cognitive biases that affect saving of young more than saving of old? I would like to know more about this topic so please provide references if possible.

  • 1
    $\begingroup$ I think you may be confusing phenomenon with theory (that explains the phenomenon). The present bias is a phenomenon, while the dual-self models are theories that seek to explain the present bias phenomenon. It's not clear whether you're asking for theories that predict under-saving or actual psychological/neurological conditions that lead to under-saving. $\endgroup$
    – Herr K.
    May 6, 2021 at 14:49
  • $\begingroup$ @HerrK. I did not know that, I would like to know a bit of both. I would like to know the biases but also what explains them $\endgroup$
    – Ezekiel
    May 7, 2021 at 18:05
  • $\begingroup$ Apparently languages can affect people's saving behavior. The actual paper. $\endgroup$
    – Herr K.
    May 8, 2021 at 2:15

1 Answer 1


A study of Gopi Shah Goda, Matthew Levy, Colleen Flaherty Manchester, Aaron Sojourner, and Joshua Tasoff (2015) The Role of Time Preferences and Exponential-Growth Bias in Retirement Savings showed that in the US the most important cognitive bias is the exponential growth bias.

Exponential growth bias is bias that occurs because people intuitively do not understand exponential growth. So when people save they think about growth intuitively in linear way.

I don't know if there is a study that says it affects younger people more, but I think it would make sense since more time difference between present and future also means a larger difference between exponential and linear growth.


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.