AP7, Sweden’s second-biggest pension fund, has launched an initiative to help raise awareness of pension savers’ personal financial decision-making, using behavioural science to shed light on the psychological processes at work.
The SEK905.2bn (€79.8bn) Swedish national pension fund, which runs the default option in the country’s defined contribution premium pension system, said the new project “Tänkonomi” (thought-finance) – which will take the form of a podcast series – “will explore the borderland between psychology and economics”.
Mikael Lindh Hök, communications strategist at AP7, said: “Many people today feel worried about their finances, future and pension, which is both human and understandable.
“With Tänkonomi, we want to increase understanding of how we think and hope to be able to both reassure and contribute with new insights into human behaviour – in a sometimes slightly unexpected way,” he said.
By raising awareness of psychological mechanisms, Lindh Hök said people could understand themselves better and make even better decisions in the long run.
“Tänkonomi will do this by highlighting various themes within behavioural research, but in a way that sometimes strays quite far from the finance-lingo contexts economics usually inhabits,” he said.
In the first episode of the podcast, AP7 says psychologist Erik Bohjort goes through various processes that lead to people making seemingly irrational decisions – including confirmation bias and the sunk-cost fallacy.
“If we buy a share that suddenly starts to decrease in value, there is a tendency for us to buy more of it in order to somehow avoid accepting the loss that we have created for ourselves,” said Bohjort, a psychologist with the Nordic Behavioural Group consultancy.
“It can also be a way to recover the loss in our head,” he said.
The first podcast also addresses how astrology affects decision-making, according to AP7.
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