Do peers increase job starters’ willingness to gather pension- …sbe.maastrichtuniversity.nl/equis/wp-content/uploads/... · 2016-02-23 · Do peers increase job starters’ willingness

Do peers increase job starters’ willingness to gather pension-

specific information?

How establishing social norms can raise pension awareness amongst youngsters

Master Thesis

Maastricht University

School of Business and Economics

Maastricht, 2015-01-21

Arkadi Vigotski

I6003510

M.S. IB. Marketing-Finance

Master Thesis

Supervisor: Dr. T. Post

Second reader: Dr. E. Brueggen

Do peers increase job starters’ willingness to gather pension-specific information?

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Abstract This research studies how peers affect youngsters. Extending the academic literature in the field of psychology and behavioural finance, a link is made between social norms, youngsters and pension decisions. The results of a natural experiment conducted on a sample of 73 graduate students suggest that displaying peer information is sufficient to establish a social norm, which significantly increases participant’s willingness to voluntarily request pension-specific information. Additionally, this research provides valuable advice to policy makers. Keywords: Social norms, social proof, reference group influence, pension awareness


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1. INTRODUCTION 4

2. LITERATURE REVIEW 6 2.1 SOCIAL NORMS 6 2.2 SOCIAL PROOF 8 2.3 JOB STARTERS AND PEER INFLUENCE 9 2.4 RETIREMENT PLANS AND PEER INFLUENCE 10

3. HYPOTHESIS DEVELOPMENT 12

4. METHODOLOGY 13 4.1 PRELIMINARY STUDY (STUDY ONE) 13 4.1.1 PURPOSE AND METHOD 13 4.2 MAIN STUDY (STUDY TWO) 14 4.2.1 EXPERIMENT DESIGN & PROCEDURE 14

5. RESULTS 19 5.1 DESCRIPTIVE ANALYSIS 20 5.2 JOB STARTERS AND ADDITIONAL FINANCIAL INFORMATION 22 5.3 JOB STARTERS AND PENSION-‐SPECIFIC INFORMATION 26 5.4 PERCEIVED IMPORTANCE AND PENSION INFORMATION 29

6. LIMITATIONS 31

7. ADVICE FOR POLICY MAKERS 32 7.1 “FACEBOOK R” 33 7.2 PERSONALIZED STATISTICS 35

8. CONCLUSION 36

9. FUTURE RESEARCH 38

10. REFERENCES 40

11. APPENDIX 43


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1. Introduction

Today, the pressure of an aging population in the European Union has resulted in difficulties in

fulfilling future pension promises to its retirees. Many EU states realize this problem and start

shifting the risks and responsibilities away from centrally planned and organized pension

schemes (i.e. defined benefit) towards the individuals (i.e. defined contribution) (EIOPA, 2013).

Solving the underfunding problem, however, may lead to other complications, such as the

decrease of living standards of individuals at retirement age. Contrary to the belief that

rationality drives decision-making, people can be seen to exhibit biases and have troubles

starting to save early enough to avoid complications later. In the United States, there is evidence

that one out of two households fail to keep up their living standards when retired (Munnell,

Webb, & Golub-Sass, 2009). There are few reasons to believe that Europeans will be spared

from the same destiny. Thus, people’s retirement decisions in the EU are gaining in importance.

Choosing the correct steps with regard to one’s retirement ‘plan of action’ should be ranked at

the top of one’s priority list. Not only are the steps of interest, but the correct timing is vital, too.

Young people are in the best age to start saving for their retirement but paradoxically, they are

also in the age group that cares the least about pensions. One of EIOPA’s (2013) suggestions is

to simplify the information provided to these youngsters. While this is good advice, it still does

not change the fact that youngsters do not request this information. Hershfield et al. (2011)

explain this phenomenon as the result of a lack of connection between the present and future self.

In that sense, whatever information is provided does not make pensions more relevant to

youngsters. A number of studies show that peers strongly affect the behaviour of people (e.g.

Cialdini, Kallgren, & Reno, 1991). This research shows that providing peer information

increases youngster’s willingness to request pension-specific information. The strong positive

results show that young people are affected by peer influences. Exposing students to peers’

information raised the percentage of the experiment participants requesting pension information

by almost 20%. This result indicates that young people tend to follow their peers’ lead even in an


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allegedly uninteresting topic, such as pensions.

This research will contribute to the literature in the field of psychology that examines the effect

of peers’ influence on youngsters and links it to the field of behavioural finance. Over the last

decade an increasing amount of studies were conducted whose results show that peers influence

have an effect on decision making in different academic fields, such as environmental

consciousness (Goldstein, Cialdini, & Griskevicius, 2008) or consumer behaviour (Salmon,

Fennis, de Ridder, Adriaanse, & de Vet, 2014). In the field of behavioural finance, Duflo & Saez

(2002, 2003) found that peers impact individuals making pension decisions. Hence, following

their findings, this research will aim to test whether peers can influence a younger age group.

This study is relevant, as the social effects on younger age groups have not yet been researched

in the context of pension awareness to date. From a policy-making perspective, it will

demonstrate that peer influences can be used as a tool to raise pension awareness among

youngsters. This study conducts a natural experiment to test this reasoning.

An advantage of conducting a natural experiment is that a setting close to reality can be

replicated. Results can be applicable for policy makers. 73 graduate finance students were

invited to the experiment and were tested whether displaying peers’ information can influence

their willingness to request pension-specific information. Sample-related biases are a

disadvantage of this study. But since this research targets the specific social group of young

people and not the whole, the strong results can be considered useful with regard to the

subpopulation of interest.

The main contribution of this research is to study whether youngsters, people in an age group

close to starting their first job, can be, by using the effect of its peers, animated to voluntarily

request pension information. It is accepted that job starters are overwhelmed by the complexity

of the financial decisions (Lusardi, Mitchell, & Curto, 2009) and tend to postpone taking actions

to a later point in time (EIOPA, 2013). The results of this study suggest that this difficulty can be

overcome and utilizing the findings of social norms, social proof and reference group influence

to raise the interest of pensions. Overall, these findings could benefit the society as a whole.

The remainder of this study is structured as follows. The next section provides a theoretical


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background for the current research. Specifically, the goal is to link the theories of social norms

and social proof to youngsters and pensions. Second, the hypotheses are developed. Third, the

reason for Study 1 and its outcomes are shortly indicated, and the design and procedure of Study

2 are thoughtfully described. Fourth, the results of Study 2 including the findings will be

analysed and discussed. Fifth, the research’s limitation will be discussed. Sixth, advice for policy

makers is given; particularly the idea of “Facebook R” and personalized statistics is discussed.

Finally, this research concludes and provides suggestions for future research.

2. Literature review

2.1 Social Norms

Various problems in society seem to remain unsolvable, because people do not have the right

incentives to comply. Goldstein et al. (2008) study a problem that worries hotel managers around

the world: towel (re)usage. Many individuals agree that a fresh towel everyday is one of the

perks about being a hotel guest. However, from the hotel management’s perspective, this service

is not only costly but also harms the environment. To solve this issue, Goldstein et al. (2008)

conduct an experiment to study the effect of social norms. Usually, hotel staff hangs a sign

kindly inviting their hotel guests to reuse their towels for the sake of the environment, which is

industry standard. It yields positive results, as 35% of all hotel guests comply with this request.

Opposed to this strategy, Goldstein et al. (2008) suggest a different solution. They expect that

social norms yield better results. They simply inform their guests by providing a new sign that

75% of the hotel guests reuse their towels. The results show that the participation rate in the

towel re-usage program jumped from 35% to 44,1%. Guests are not bothered to reuse their

towels and managers make substantial savings and simultaneously benefit the hotel chain’s brand

image for their environmental pro-activeness. To paraphrase Neil Armstrong, that’s one small

step for hotel guests and one giant leap for hotel managers… and maybe one small step for the

environment, too. A seemingly trivial door sign established a norm people comply to.


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A wide array of research demonstrates that social norms shape an individual’s behaviour in

social contexts (e.g. Axelrod, 1986; Cialdini et al., 1991; Cialdini & Trost, 1998). Norms are the

unwritten rules that contribute to societies well functioning. Not respecting a norm can lead to

being punished by the social network in which one exists, and not necessarily by law (Axelrod,

1986; Cialdini & Trost, 1998). For instance, having loud phone conversations on public

transport, tipping the waiter less than 10%, or not wearing a suit in a business meeting are most

certainly not regulated by law, but engaging in such behaviours come at a social cost. One’s

reputation can decrease (Axelrod, 1986). Overall, society thinks less of people that do not

conform to the norms of a given situation. Respecting norms also regulates conflict (Axelrod,

1986). For instance, when walking on the sidewalk, it is common to walk on the right side to

avoid confusion.

Axelrod (1986) explains that different points of view can be used in defining norms. At the time,

scholars took either an expectations-, value- or behaviour- perspective. These three aspects are

closely linked to one another. Expectations and values often reflect a static approach to norms.

Put differently, these definitions assume that a norm remains unchanged consistently. In contrast,

a behavioural approach includes the idea that norms are based on actual behaviour and are thus

challengeable. Based on the behavioural approach, Axelrod (1986, p. 1097) provides a widely

accepted definition:

“A norm exists in a given social setting to the extent that individuals usually act in a certain way

and are often punished when seen not to be acting in this way.”

It means that, if the social setting changes, a norm can change or in the long run fade away.

Axelrod (1986) claims that norms can be challenged. Norms reach their peak of awareness in

these times. Norms being currently challenged are those regarding gender roles. To provide an

example, stay-at-home dads were difficult to imagine a couple of decades ago, but nowadays the

phenomenon is gaining in acceptance. Thus, following this reasoning, establishing a norm

around requesting pension information early could minimize the risk of the decreasing living

standards of future retirees. Axelrod (1986) supports the idea that a norm can, if well prepared,

be established faster than one can imagine.


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Cialdini et al. (1991) distinguish between descriptive and injunctive norms. Descriptive norms

reflect the actions people usually take, while injunctive norms reflect what people should

actually do. For instance, not every person passing a street musician would give him money (i.e.

descriptive), but would approve someone who does (i.e. injunctive) (Cialdini et al., 1991). The

authors believe, that the distinction between both norms is necessary because they rely on

different sources of motivation. People rely on descriptive norms when they want to make an

efficient and quick decision: “If everyone is doing or thinking or believing it, it must be a

sensible thing to do or think or believe” (Cialdini et al., 1991, p. 203). Injunctive norms are

motivated by social acceptance and the desire to avoid social punishment. Further, they consist

of the informal and moral rules of a social group. It is desirable to be helpful, or to reciprocate a

favour because individuals value the social approval that results from applying moral rules (e.g.

Cialdini et al., 1991; Cialdini & Trost, 1998).

2.2 Social proof

As Cialdini (1984, p. 117) clarifies, “we view a behaviour as more correct in a given situation to

the degree that we see others performing it […], the actions of those around us will be important

in defining the answer”. Since descriptive norms provide an information processing advantage in

unknown situations (Cialdini et al., 1991; Goldstein et al., 2008), many authors have referred to

them as social proof, a mechanism of social norms (Axelrod, 1986). A number of papers explain

how external social cues help the individual to behave in the correct way. Cialdini et al. (1991)

refer to these cues as an “information processing advantage”. Just as descriptive norms, social

proof is an important mechanism to support the establishment and maintenance of customs

(Axelrod, 1986). Social proof reflects the tendency to imitate the action of others in uncertain

situations. Youngsters seek conformity. This mechanism is of interest for this research.

Youngsters, being in an uncertain and novel situation (i.e. pensions), are expected to know little

on this topic and perceive its peers’ course of action as insightful. Social proof reflects a certain

course of action. Complying also leads to positive outcomes such as group belongingness


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(Axelrod, 1986).

A number of studies demonstrate social proof in various contexts. In food decision-making, a

paper bin full of candy papers was a cue that eating the candies placed in a bowl was “socially

accepted”. With an empty bin, people ate significantly fewer candies (Salmon et al., 2014).

Further, social proof is an effective tool to foster online sales. Since consumers cannot inspect a

product’s quality physically, they rely on online product recommendations to make informed

decisions. Hence, review valence and volume on retailers’ websites such as Amazon.com act as

the social proof (Amblee & Bui, 2011)

2.3 Job starters and peer influence

There are reasons to believe that youngsters are more affected by peer influence than more

mature people. As discussed by Park and Lessig (1977), college students have a higher

susceptibility to accept the influence of a reference group, because they are less prone to cope

with decisional uncertainty and risk. In that sense, they prefer to comply with their peers. Those

reference groups can be strangers. There are three main types of reference group influences,

namely informational, utilitarian and value-expressive.

First, youngsters seek informational reference group influence when they need to gain

knowledge. In this case, opinion leaders may be perceived as credible sources of information and

are therefore important influencers. The authors argue that informational reference group

influence is similar to Deutsch & Gerard’s (1955) informational social influence, which in turn is

similar to the aforementioned descriptive norm (Axelrod, 1986; Cialdini et al., 1991). They are

similar because they are all based on the same source of motivation, namely making fast and

accurate decisions in uncertain situations (Cialdini et al., 1991; Deutsch & Gerard, 1955).

Second, utilitarian reference groups influence an individual when he believes that his actions are

visible to others and when the social reward is the motivation (Park & Lessig, 1977). Again,

similarities can be observed between utilitarian reference groups, injunctive norms (Cialdini et

al., 1991) and Deutsch & Gerard’s (1955) normative social influence. The reasoning is that


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social approval and social rewards drive an individual’s motivation to comply with a certain

group (e.g. Park & Lessig, 1977).

Third, an individual will comply with a value-expressive reference group, to enhance and

maintain his self-concept and vice versa (Park & Lessig, 1977). Indeed, Cialdini and Trost

(1998) argue that people enhance their self-concept by behaving in a consistent manner. This

research extends beyond what has been detailed here, but it will not be explained further as it is

outside of the scope of this research.

In this thesis, displaying data regarding peers’ decision is mostly in accordance with

informational reference group influence because youngsters are in an uncertain situation (i.e.

pensions) in which they seek for the correct way to behave.

Finally, the outcome of Park & Lessig’s (1977) study show that students are more prone than

older age groups to comply with informational, utilitarian and value-expressive reference group

influences, because they show less confidence in their own judgement in uncertain and risky

situations. Furthermore, the authors argue that students are in a phase of their lives where social

aspects are highly important. Students are in an age in which they form their ego and

continuously learn from others (Deutsch & Gerard, 1955; Park & Lessig, 1977). Consequently,

students are “without exception consistently more susceptible to reference group influence”

(p.107) than working people. This finding is in line with Steinberg and Monahan (2007) who

claim that young people are more strongly influenced by peers than older people.

2.4 Retirement plans and peer influence

So far, social norms, reference groups and the social proof have been described in depth. Now, it

is relevant to discuss whether descriptive social norms can be established to increase the

attractiveness of pensions among young people.

Duflo and Saez (2002) conduct a study on retirement decisions of university library staff. They

investigate whether peer effects within a certain department exist, specifically, whether

colleagues’ investments and vendor decisions influence their co-workers’ choices. Since the


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peers in the library have been working together for a substantial period of time, their influence

on each other can be considered strong. This thesis argues that the peer effects described by

Duflo and Saez (2002) are similar to injunctive norms (Cialdini et al., 1991). One year later, they

replicate their study, but conduct a randomized experiment to support their initial findings (Duflo

& Saez, 2003). A certain department (i.e. treatment group) received an invitation letter to attend

a fair that provided information on various pension schemes. The control group, (i.e. another

department within the same library), did not receive this letter. Those who attended the fair

enrolled into certain pension schemes. The question of interest was whether a spill over effect

would reach untreated departments. The results show that social effects did indeed lead some

people in the untreated department to get specific pensions schemes. Consequently, even for

important decisions such as pension plans, the results indicate that people are prone to follow

their peers’ lead, without going through an elaborate decision-making process (Duflo & Saez,

2003). While Duflo & Saez (2002, 2003) partly explain their results with peer and network

effects, this thesis argues that their results can be linked to social norms, because they

demonstrate that staff that have been working in the same library for a substantial period of time

exhibit similar saving patterns.

This literature concludes that social norms can be useful to animate people’s willingness to

request pension information. As this research shows, it is especially effective in younger ages.

Furthermore, this research argues that social norms, specifically descriptive norms, social proof

and informative reference group influence are referring to the same human motivations to make

fast and accurate decisions in uncertain situations. Consequently, this research goes so far to

argue that these three descriptions can be used interchangeably.

The insights of the literature review highlight the relevance of using norms as a means to get

people care about pensions. Specifically, the effects of descriptive norms on youngsters are

hypothesized. On the one hand, because they are more likely than older age groups to follow

their peers and on the other hand, young people are arguably at the best age to make pension

decisions. Based on these insights, a link between young people, descriptive norms and pensions


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can be made. Hence, the hypothesis can now be developed.

3. Hypothesis Development The social norm that is tested in this research is the descriptive norm. As explained above,

descriptive norms simply imply imitating peers’ actions Cialdini et al. (1991, p. 203) argue that

people tend to comply: if everyone is doing it[…], it must be a sensible thing to do[…]. Can this

evidence be applied to the field of requesting information about financial services (insurances,

pensions and investments)? This is exactly what this research wishes to test. What is the

influence of simply displaying the information of peers’ decision? Therefore Hypothesis 1 reads:

Hypothesis 1: Simply displaying peers information increases the individual’s willingness to

request any additional financial information.

Since the main goal of this research is to increase youngsters’ and job starters’ willingness to

gather information on pensions, the main hypothesis will be tested in the same setting. Following

Duflo & Saez’s (2002, 2003) results, peer effects exist in the context of pensions. Making the

participants believe that the majority perceive pension as the most relevant topic, does it increase

the percentage of students requesting pension information? Therefore the main hypothesis is as

follows:

Hypothesis 2: Displaying the information that peers perceive pensions as the most relevant

financial topic increases individual’s willingness to request pension-specific information.

There is reason to believe that people who perceive a certain financial topic as highly relevant

(i.e. pension information) will request information on that topic irrespective of the effect. To

isolate the peer effect, the control variable “pension care” will be created. If the results show that

people that strongly care for pensions are more likely to request pension information, the main


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hypothesis is weakened. In order to support the main hypothesis, Hypothesis 3 should not be

supported. Therefore, Hypothesis 3 reads as follows:

Hypothesis 3: Students who strongly care for pensions are more willing to request pension-

specific information.

Now that the hypotheses are developed, this research proceeds and tests the claims. First, the

methodology is described.

4. Methodology

4.1 Preliminary study (Study one)

4.1.1 Purpose and method

The purpose of Study one is twofold. One the one hand, it was necessary to get a first impression

on students’ mental attitudes towards the three chosen financial services, namely pensions,

insurances and investments. On the other hand, it was a necessity to collect empirical data rather

than invent the theoretical data needed to perform Study two. Specifically, random students were

asked about their preference for one of the three financial services. Precisely, in return for a

small candy bar, the participants were asked, “which of these three topics do you perceive to be

the most relevant?”. In addition to their preferences, their demographics were noted (age &

gender). It was expected that most students choose investments because investments are

considered the most interesting among the three topics offered. It was also expected that students

would opt for pension last, as retirement age is perceivably too far away (Hershfield et al., 2011)

and therefore the topic pension is perceived irrelevant at the current point of time. Finally,

gender differences were also expected. It was expected that males, due to a higher risk-seeking

tendency, would prefer investments whereas females, who are more risk averse then male, would

perceive insurance as more relevant. This is due to the fact that studies have revealed women to


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be more risk-averse than man (Jianakoplos & Bernasek, 1998) and because men exhibit higher

levels of overconfidence than women (Barber & Odean, 2001). The expectations were met and

are presented in Appendix A.

4.2 Main study (Study two)

4.2.1 Experiment Design & Procedure

Since the behaviour of the participants was of interest, a controlled environment in the laboratory

was needed. Only a questionnaire would have not been sufficient. To achieve valid and reliable

results, a controlled environment is of great importance. The participants were 73 Master IB

Finance students (53 male and 20 female) who took Venture & Corporate Finance. They were

invited by Dr. Paulo Rodrigues (Professor for Finance, Maastricht University) and retrieved a

course credit as an incentive. The invitation read as follows:

"Dear students,

Within this course you have the opportunity to increase your participation grade by 0.5 by taking

part in an experiment. The experiment is about "brand awareness towards major financial

institutes". The experiment will take place in the BeeLab (right across of the main entrance of the

SBE) on November 27 & 28. It will last approximately 30 minutes. To register, please follow

this link: http://doodle.com/g5us7amai7se4cgw

If the link does not work, copy & paste it into a new window of your browser.

Please be aware that the spots are limited and first come first served policy applies.

If you have questions please write an email to [email protected]

Best,

Paulo Rodrigues"

Providing a course credit of only 0.5 on the overall participation grade has an effect of


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approximately 1% of the overall grade. The participants had the choice to register for the

experiment for either Thursday or Friday. For each day there were three time slots available. The

participants were evenly distributed across the two experiment days. Overall, the participation

rate was 99%.

When the participants arrived to the experiment location, they registered and after a short

briefing they were seated at the computers and were asked to fill out an online questionnaire. The

questionnaire was created with the online survey program “Qualtrics” and had three main

purposes. First, student’s perceived importance for pensions was of interest. Nine of many

questions asked the participants how much they cared about investments, pensions and

insurances. A 6-points likert scale was chosen to assess the importance (strongly disagree –

strongly agree). A scale with no neutral point was chosen to force participants to state their

opinions (Malhotra, 2010). By this means, three variables were constructed (“investment care”,

“pension care” and “insurance care”). To test for validity Cronbach’s alpha was conducted. The

results can be seen in Table 1. A value >0.6 indicates satisfactory internal consistency reliability

(Malhotra, 2010).

The second purpose of the survey was to

gather information on the demographics.

The third purpose was to make the

participants spend different amounts of time

in the laboratory to avoid all participants

finishing simultaneously. It was important

that the participants separately left the experiment room, to avoid biases such as path

dependency. For that reason, the main purpose of most of the questionnaire questions was of a

time filling nature. The students were invited to answer a multitude of questions on the context

of eliciting brand awareness towards some Dutch financial institutes. Many questions about

different aspects of financial institutes (ING, Rabobank, ABN-AMRO, etc.) were asked. There

was a high diversity of questions, ranging from likert scale questions (do you agree that ABN-

Table 1 Reliability Statistics

Cronbach’s Alpha N of Items

Investment Care 0.784 3

Pension Care 0.661 3

Insurance Care 0.730 3


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AMRO established themselves as a national brand?) to open box questions. Additionally, the

participants were asked to evaluate the design of a website and leave comments for possible

improvements. Since the respondents were forced to answer all questions, it took them different

amount of times to finish the questionnaire (12 -30 minutes). At the end of the questionnaire, the

last question read: “When you leave, you have the opportunity to request further information about one of the three financial

services. There is an excel sheet waiting outside where you can put your experiment ID in one of the three

columns of the list and you will receive an email with the information on the financial service of your choice by

the end of next week.”

“That was it! Thank you very much for your valuable time and feedback.”

“Please raise your hand when you have finished reading this information, so the experimenter can end the

survey and debrief you. Please do not close the survey by yourself.”

After a student raised his hand, she was debriefed and could leave the room, alone. Outside the

computer room, two colleagues were waiting in front of a computer monitor and asked the

leaving participant whether she was interested in receiving some information on financial

services (see Figure 1). If so, she could choose one out of the three financial services (i.e. on

insurance, pension or investments). The participants were neither forced nor led to make a

choice. When the student decided to request information on one of the three services, her answer

was noted and she was allowed to leave. After the student left, the experimenter in the computer

room received a notification, so that he could debrief the next participant. This procedure

repeated until the last student had left the experiment location. To guarantee that the effect was

consistent, the experimenters did not change during the course of the experiment.


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Figure 1 Experimenter asking whether leaving participants were interested in additional information

To evaluate peer pressure, the students were evenly divided into two different groups. Group 1

was exposed to an effect simulating peer pressure, whereas Group 2 was not. The students were

not aware that two different groups existed.

4.2.1.1 Group 1 (with effect) The participants exposed to the effect saw a screen with an excel sheet with student IDs. The

heading of the sheet said “perceived most relevant topic”. The sheet was divided into three

columns. To simulate peer effect, there were two and three student IDs in the column of

“investments” and “insurances”, respectively. The column “pensions” had eleven student IDs

(see Figure 2). To guarantee the same effect, the amount of the IDs did not change over the

course of the experiment. The students were made to believe that the majority of their peers

decided to request information on the topic pension. The IDs used for the sheet were hand


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collected during Study 1 and therefore real and authentic.

Figure 2 With peer effect

4.2.1.2 Group 2 (without effect) Participants from group 2 were not presented a screen with peer information. It was virtually

blank, merely saying “pensions, insurances, investments” (see Figure 3). Apart from that, the

procedure was similar. The participant made an individual choice without the influence of its

peers. The reasons for choosing this rather complicated process were the strict rules and

regulations of Maastricht University’s laboratory (BeeLab). Deception and lying is strictly

forbidden.


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Figure 3 Without peer effect

To analyse whether the effect of providing peer information is significant, an independent

sample t-test is conducted. Since a between subject design is applied, a difference which is

statistically significant is enough to conclude that the effect works. In addition, to understand

whether demographics (i.e. gender) or pension-care play an important role, a logistic regression

is run. Here, the dependent variables are binary and are the following: “request any additional

information” (yes/no), and “request pension information” (yes/no).

5. Results

First, the descriptive analysis will be discussed. Second the results with regard to the first

hypothesis will be stated and discussed. Specifically, in addition to an independent samples t-

test, a logistic regression will be run and gender differences with regard to requesting any


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additional information will be discussed. Third, Hypothesis 2 (main hypothesis) will be tested.

For this, at first an independent samples t-test will be conducted with the whole sample. To gain

further support, a further t-test with only the subsample of participants requesting additional

information will be run and discussed. Finally, a logistic regression will be analysed and

discussed to see whether the peer effect works isolated or if other independent variables such as

perceived importance influence the likelihood of people requesting pension-specific information.

5.1 Descriptive Analysis

From Table 2a), one knows that there are 53 males (72.6%) and 20 females (27.4%) in the

sample, giving a total of 73 respondents. 32 respondents (43.8%) are German, 19 (26%) are

Dutch and 22 (30.1%) are neither German nor Dutch. From Table 2b) one knows that the 73

respondents are ranging in age from 21 to 30 years (M=23.73, SD=1.726). As expected, the

respondents care for investments the most (M=4.87, SD=0.84) followed by insurances (M=4.67,

SD=0.85) and pensions (M=4.21, SD=0.97).

Table 2a) Nationality & Gender

Nationality Frequency Percent Gender Frequency Percent Dutch 19 26.0 Male 53 72.6 German 32 43.8 Female 20 27.4 Other 22 30.1 Total 73 100 Total 73 100

Table 3 shows, in line with Study 1, that due to their risk averse nature, female students perceive

insurance as the most relevant financial topic (M=4.9, SD=0.83) followed by investments

Table 2b) Age & Perceived Importance N Min. Max. Mean Std. Deviation Age 73 21 30 23.73 1.726 Pension care 73 2.00 6.00 4.2146 .96604 Insurance care 73 2.33 6.00 4.6712 .85435 Investment care 73 2.67 6.00 4.8721 .84370


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(M=4.42, SD=0.97). Male students, due to their risk seeking nature, perceive investments as the

most relevant financial topic, as expected (M=5.04, SD=0.73) followed by insurances (M=4.6,

SD= 0.86). Both genders perceive pensions as the least relevant financial topic with a mean of

3.92 (SD=0.82) and 4.33 (SD= 1.00) for female and male participants respectively. Next it is

clarified whether the differences are statistically significant. The results can be seen in Appendix

B. The mean difference of 0.63 for investments is significantly different (p<0.05). The mean

difference for pensions (0.41) is statistically weakly significant (p<0.1). Difference in insurance

is insignificant (difference: 0.27, p>0.1) (see Appendix B). From the data, one can conclude that

the gender difference only plays a significant role at 5% level and at 10% level for the topic of

investments and pensions, respectively. Hence, male students perceive investments and pensions

more important. It is likely that the insignificance in insurances is due to the small sample.

National differences yield the same result. There is no statistical difference observable in the

perceived importance between the nationalities (see Appendix C). Overall, all nationalities

perceive investments as the most important topic (M=4.87, SD=0.84) followed by insurance

(M=4.67, SD=0.85) and pensions (M=4.21, SD=0.97).

Table 3 Perceived Importance

N Min. Max. Mean Std. Deviation

Pension 53 2.33 6.00 4.3270 1.00105

Male Insurance 53 2.33 6.00 4.5975 .86073

Investments 53 2.67 6.00 5.0440 .73391

Pension 20 2.00 5.33 3.9167 .81560

Female

Insurance 20 3.00 6.00 4.8667 .82646

Investments 20 2.67 6.00 4.4167 .96048


22

5.2 Job starters and additional financial information

Now it will be analysed whether the willingness to request any kind of information increases

with displaying peers’ information. 35 out of 73 participants were not exposed to the effect,

whereas 38 were. Table 4a) presents the group statistics. Table 4b) presents the results of the

analysis.

Table 4a) Group Statistics- request additional information

Request additional information= 1, if pension, insurance or investments is chosen. Additional

information= 0, if no information requested.

Peer effect N Mean Std. Deviation Std. Error Mean

Additional information

No 35 0.57 0.502 0.085

Yes 38 0.76 0.431 0.070

Table 4b) Independent Sample Test – request additional information

The independent samples t-test is used because the difference of the mean score between the two groups is of interest

(effect vs. no effect).

Levene’s Test for Equality of Variances

t-test for Equality of Means


F Sig. t df Sig. (2-tailed)

Mean Difference

Std. Error Difference


Equal variances assumed

10.249 0.002 -1.755

71 0.084 -0.192 0.109

Equal variances not assumed

-1.744

67.308 0.086 -0.192 0.110


23

An independent-samples t-test is conducted to compare the student’s willingness to request

additional information on any financial service with and without peers’ effect. Table 4a) and 4b)

show that there was a significant difference in scores for “with effect” (M=0.76, SD=0.431) and

“without effect” (M=0.57, SD=0.502; t (73), p<0.1, two-tailed). Table 4b) shows that the

magnitude of the difference in the means (mean difference= 0.192) is large considering the small

sample. This test does not distinguish between the financial services chosen by the participants.

57% of the participants not receiving the effect voluntarily requested additional financial

information. 76% of the participants that received the effect requested any additional

information. The result is significant at a 10% level. The fact that some IDs (no matter from

which column they originated) were displayed, made a difference of almost 20%. Due to the

small sample, it cannot be analysed whether the effect would have been stronger if the majority

of the IDs were in the column ‘’investments’’ or column ‘’insurances’’, instead of the column

“pensions”. Therefore, further studies could investigate this. It can be argued that that the

participant’s willingness to request specific information on any kind of financial services can be

increased dramatically.

Therefore Hypothesis 1 is supported, consequently, the mere fact that the participants in the

treatment group saw that their peers requested any information led them to follow and also

request financial information. Since there are more male students (53vs.20) and they are most

interested in investments, it is of interest to test for gender differences. Thus, a logistic regression

is conducted and the results can be seen in Table 5.


24

Table 5 Logistic Regression Predicting likelihood of requesting

additional information

Dependent Variable: request any additional information (binary: yes/no)

Independent Variables:

Effect: dummy 1 yes, 0 no

Male: dummy, 1 male, 0 female

B S.E. Wald df p Odds Ratio

Effect 0.857 0.546 2.460 1 0.117 2.355

Male 1.618 0.574 7.934 1 0.005 5.042

Constant -0.808 0.538 2.259 0.133 0.446

A direct logistic regression was performed to assess the impact of two factors on the likelihood

that respondents would request any additional information on one of the three financial services.

The full Model can be viewed in Appendix D. The Model contains two independent variables

(dummy effect, dummy male). The full Model containing the two predictors is statistically

significant, x2 (2, N=73)=11.365, p<0.01, indicating that the Model is able to distinguish between

respondents who requested and did not request additional information. As shown in Table 5, the

dummy variable “effect” is statistically insignificant at a 10% level. However, the p-value of

0.117 indicates that a trend is observable. The slight insignificance can be explained by the small

sample. Interestingly, the independent dummy variable “male” makes a statistically significant

contribution to the Model, recording an odds ratio of 5.042. This indicates that male respondents

are about five times more likely than their female counterpart to request additional information,

controlling for other factors in the Model. This finding is unexpected. To verify this outcome, an

additional independent samples t-test is conducted and the results are presented in Table 6a) and

Table 6b)


25

Table 6a) Group Statistics- request additional information (male vs. female)

(45% of female were exposed to the effect)

Gender N Mean Std. Deviation Std. Error Mean

Additional Information

Male 53 0.77 0.423 0.058

Female 20 0.4 0.503 0.112

Table 6b) Independent Samples Test- request additional information (male vs. female)





Mean Difference


Additional Information


5.837 0.018 3.196 71 0.002 0.374 0.117


2.953 29.712 0.006 0.374 0.126

An independent-samples t-test is conducted to compare the willingness to request any additional

information for males and females. There was a significant difference in scores for males

(M=0.77, SD=0.058) and females (M=0.4, SD=0.112; t (73), p<0.01, two-tailed). The magnitude

of the difference in the means (mean difference= 0.374) is large. The results of the t-test support

the finding of the previously conducted logistic regression. Indeed, male participants were

significantly more likely to request additional information. However, the reasons for these results

are ambiguous. Since 45% of female participants were exposed to the effect, the interpretation


26

can be ruled out that a significantly lower number of female students were exposed to the effect.

An explanation could be that male students are more interested in investments and for that reason

request more information on investments. However, due to the unequal sized samples (53vs.20),

it is difficult to draw valid conclusions with regard to gender differences.

To sum up, displaying peer information increases youngster’s willingness to request any

additional information. Hence, a social norm is established where people follow their preferences

and voluntarily request additional information. Thus, Hypothesis 1 is supported. Additionally,

gender differences were found but no valid conclusion can be drawn. The next section will

analyse whether displaying the specific choice of other students (i.e. 11 student ID’s in the

pension column and the last five ID’s in the remaining columns) can raise youngster’s

willingness to request pension-specific information. Hence, the main hypothesis will be tested.

5.3 Job starters and pension-specific information

Hypothesis 2 claims that displaying information that peers perceive pensions as the most relevant

financial topic increases individual’s willingness to request pension-specific information. Table

7a) and Table 7b) present the results.

Table 7a) Group Statistics- request Pension Information

Request pension information =1, if pension is chosen request pension information =0, if any other or no information is requested


Pension Information

no 35 0.086 0.284 0.048

yes 38 0.263 0.446 0.072


27

Table 7b) Independent Samples Test - request pension information





Mean Difference


Pension Information


19.532 0.000 -2.007

71 0.049 -0.177 0.088


-2.043

63.365 0.045 -0.177 0.087

An independent-samples t-test is conducted to compare the student’s willingness to request

specific pension information with and without peers’ effect. There is a significant difference

(5%) in scores for “with effect” (M=0.263, SD=0.446) and “without effect” (M=0.086,

SD=0.284; t (73), p<0.05, two-tailed), as seen in Table 5a) and Table 5b). The magnitude of the

difference in the means (mean difference= 0.177) is large considering the small sample, as seen

in Table 5b). As expected pension information was the topic the participants were interested the

least. From the whole sample, only 8.6% of the participants that were not exposed to the effect

requested pension information. However, of the entire sample, 26.3% of the participants that

were exposed to the effect requested pension information. Considering the fact that this topic is

perceived as uninteresting, a difference of 17.7% can be considered large. Therefore one can

conclude that the mere effect of providing peers’ decisions has a strong impact on the

individual’s willingness to request pension information. When participants had the option to

request additional information we saw that 11 out of 16 students, unknown to them, perceive the

topic of pension as most relevant, a social proof was created. Consequently, Hypothesis 2 is


28

supported. To find out whether the peer effect, conditionally based on requesting additional

information, increases the percentage of people requesting pension-specific information, a

further t-test is conducted with only the subsample (N=49) of those who requested additional

information. The results can be seen in Table 8a) and Table 8b).

Table 8a) Group Statistics



no 20 0.15 0.366 0.0819

yes 29 0.349 0.484 0.090

Table 8b) Request pension specific information of subsample of people requesting additional information





Mean Difference


Pension Information


11.463 0.001 -1.523

47 0.134 -0.195 0.128


-1.603

46.521 0.116 -0.195 0.122

An independent-samples t-test is conducted to compare the students’ willingness to request

pension specific information of the subsample with only the students that did request additional

information (49) with and without peers’ effect. Table 8 shows that there was an insignificant


29

difference (p=.116) in scores for “with effect” (M=0.349, SD=0.484) and “without effect”

(M=0.15, SD=0.366; t (49), p>0.1, two-tailed). Further, Table 8 shows that the magnitude of the

difference in the means (mean difference= 0.195) was pretty large considering the very small

sample, but it is statistically insignificant at 10% level. Out of the 49 people that requested

additional information, 29 received the effect and 20 did not. 35% of the people receiving the

effect requested pension specific information, whereas only 15% of the people that did not

receive the effect requested pension specific information. The difference is unfortunately

insignificant at 10%. The significance is at 11.6%. However, due to the very small subsample

and considering the high standard deviation, one could conclude that a trend supporting the main

hypothesis can be observed.

To sum up, the main hypothesis, namely “displaying the information that peers perceive

pensions as the most relevant financial topic increases individual’s willingness to request

pension-specific information” is supported. Displaying that a vast majority (68.5%) of the fellow

students perceive pensions as the most relevant topic activated a social proof, which makes it

socially correct to request pension information. Next, this paper clarifies whether there were

other reasons than the effect of peer influence that prompted people to request pension-specific

information.

5.4 Perceived importance and pension information

Hypothesis 3 theorised that students who strongly care for pensions are more willing to request

pension specific information. To test for this reasoning, a logistic regression was run. As

explained in the experiment design & procedure section, the variable pension care was created.

The results can be seen in Table 9.


30

Table 9 Logistic Regression Predicting likelihood of requesting pension information

Dependent Variable: Request pension specific information (binary: yes/no) Independent Variables: Effect: dummy 1 yes, 0 no Pension care: 1-6 (1 don’t care for pensions, 6 pensions very important) Pension_effect: moderator pension x effect (standardized) Gender_effect: moderator gender x effect (standardized) Male: dummy, 1 male, 0 female

B S.E. Wald df p Odds Ratio

Effect 1.24 0.726 2.898 1 0.089 3.442

Pension Care 0.29 0.383 0.590 1 0.442 1.342

Pension_effect 0.06 0.377 0.031 1 0.860 1.068

Gender_effect 0.019 0.366 0.003 1 0.958 1.020

Male -0.05 0.802 0.004 1 0.947 0.948

Constant -3.55 1.707 4.327 0.038 0.029

A direct logistic regression was performed to assess the impact of a number of factors on the

likelihood that participants would request pension information. The full Model can be viewed in

Appendix E. The Model contained five independent variables (dummy effect, pension care,

moderator 1: pension care x effect, moderator 2: gender x effect and the dummy male). The full

Model containing all predictors was statistically insignificant, x2 (5, N=73)=5.026, Sig. 0.413,

indicating that the Model was not able to distinguish between respondents who requested

pension information and who did not request pension information. As shown in Table 9 only one

of the independent variables (effect) made some statistically significant (p<0.1) contribution to

the Model. It records an odds ratio of 3.442. This indicates that respondents who received the

effect were almost 3.5 percent more likely to request pension information than those who did not

receive the effect, controlling for all other factors in the Model. It was hypothesized that the

participants who claimed to strongly care for pensions would be more likely to request pension

information. Hypothesis 3 is not supported as one can see from Table 9. The variable “pension


31

care” is not significant. Neither is the moderator “pension care x effect” or “pension care x

gender”: One could interpret this finding as suggesting that the students who strongly care for

pension are already informed well enough and do not feel the need to request pension-specific

information.

To summarize, no variable but “effect” is significant in explaining the DV. Therefore no

statistical support can be provided for Hypothesis 3. Peer effect is the only statistically

significant variable at a 10% level. This finding is rather statistically weak but supports the main

hypothesis (2) and can be seen as a robustness check. Hence, peers do influence a student’s

willingness to request pension information, no matter how strongly they care for pensions.

6. Limitations

The first and strongest limitation of the current research is the small and not representative

sample. Due to the scope (master thesis), the study was underpowered and therefore, in some

instances, hardly reached statistical significance. Furthermore, it is difficult to generalize the

findings of the study in the context of the whole population. Since the sample consisted of 73

International Business Master students with a specialization in Finance, one can argue that these

students barely represent the population, which limits external validity. Finance graduate

students can be considered well educated and financially literate. Moreover, one could argue that

these students understand the importance of pensions and are willing to request pension

information no matter what external influences or circumstances may be provided. However,

since the aim of this study was to test if descriptive norms work in the context of pensions, one

can conclude that they do. Additionally, one can argue that Graduate Finance students know their

own minds with regard to financial services. They intentionally chose their Master program and

have their reasons why. Therefore one could conclude that these students are more difficult to

influence than others when it comes to financial decisions. Consequently, if the sample consisted

of students that were younger and less experienced in the field of finance, one could expect that


32

the results would be even stronger. A further argument supporting the validity of this study is the

fact that a between subject design was conducted. Consequently, the experiment experiences

little contamination by extraneous factors.

The second limitation is the fact that human experimenters were conducting the intervention

(asking on which financial topic the participants would like, if at all, additional information).

This has a potential for bias. Logically, conducting a natural experiment involves people, and

people are prone to biases. However, this study minimized the potential bias by reducing the

people involved in the study to a lowest so that the effect in the scope of the experiment did

change as little as possible. Moreover, in an extensive session prior the experiment, the assistant

experimenters were thoroughly trained.

Finally, it is known that a laboratory setting lacks “realism” because the causal effect needs to be

isolated. Therefore laboratory results are difficult to extrapolate. Hence, the primary goal of the

experiment design applied was to overcome this flaw and come up with an approach as close as

possible to reality. The participants were invited to the experiment under the pretext of

“assessing brand awareness towards major Dutch financial institutes”. The online questionnaire

was designed in a way that the participants were unlikely to guess the intention of the

experiment. In addition, the real experiment took place after the participants finished the

questionnaire and after they left the computer room. The additional information that the

participants were offered was less perceived as part of the experiment but more as a benefit, and

purely in the interest of the participants and not the experimenters. Consequently, the satisfying

results indicate that establishing a descriptive norm in a real setting in the context of pensions is

feasible.

7. Advice for policy makers

As discussed throughout this thesis, the main advice for policy makers is to animate youngsters

to take an interest in pensions. This research demonstrates that young people are affected by


33

social norms. Simply displaying that many young people are interested in pensions significantly

increases an individual’s willingness to request pension information. Social norms have a great

significance in our society (for example see, Axelrod, 1986). As elaborated in the literature

review, people tend to follow other people’s paths. They imitate others’ behaviour

subconsciously, without noticing it (Goldstein et al., 2008). One could argue that using social

norms to subconsciously animate youngsters to engage in certain behaviour is unethical. But in

this case, with regard to a topic of such significance, utilizing descriptive norms to influence

youngsters is reasonable and arguably ethically justifiable. Therefore, the goal of policy makers

must be to establish a norm that caring and informing for pensions is just as normal as possessing

a driving licence or not smoking in public. Hansen and Graham (1991) conducted a study in an

attempt to prevent the start of alcohol abuse, marijuana and cigarette use among high school

students. They compared the effectiveness of resistance skill training and normative education.

Their results propose that establishing norms is an effective approach for preventing substance

usage. This research firmly believes that the same would work for increasing pension

attractiveness among young people. Specifically today, in the era of social media, establishing a

new norm seems doable. Everything said so far is vague and difficult to put in practice.

Therefore, to have a practically applicable approach, this research proposes some ideas that can

be put in practice, namely “Facebook R” and personalized statistics.

7.1 “Facebook R”

In an attempt to establish a norm around informing oneself about pensions, it could be

recommendable to use a social media platform such as Facebook, due to the scope of its impact

and central place in the lives of contemporary youngsters.

Displaying the letter “R” next to ones’ Facebook profile could be a meaningful first step in

making people care for pensions. Young people are spending a substantial amount of time

communicating with their friends, browsing through pictures or planning for the next event to go

to. Facebook has become much more than a tool to communicate with friends. This argument is


34

supported by the exponential growth in members (Acquisti & Gross, 2006). Facebook is a

platform where one can do almost everything. Therefore, when young people would observe that

there is the letter R displayed next to a friends’ profile, they could get curious. R stands for:

retirement, respect, responsibility, and right choice. To acquire the letter R next to their profile,

users need to start informing and caring for their future. Facebook already introduced its own

search engine “Facebook Search”. This means Facebook has a great collection of data.

Furthermore, due to collecting its customer’s browsing history, Facebook knows what their users

are doing. Consequently, it is possible for Facebook to conclude with certainty which user cares

for pensions and which does not. The introduction of “Facebook R” could potentially create a

buzz; hence awareness for pensions would follow. First, it would be perceived as “cool” and

“pioneers” and first-movers would start joining. Over time, laggards would follow. Hui and

Buchegger (2009) studied the influence of neighbours in online social network groups. By

neighbours the authors mean friends “in varying sense of the word” (p.7). In social networks it is

enough to be connected due to some similar interests to be considered friends. Hui and

Buchegger (2009) conclude that contacts in online social networks are approximately “100 times

more powerful in influencing a user to join a group than the same number of strangers” (p.1).

When the letter R is displayed on 7 out of 10 friend’s Facebook profiles, the individual would be

following this trend simply because she wants to belong to this group of people. Baumeister and

Leary (1995) claim that the need to belong is powerful and an “extremely pervasive motivation”

(p.497). Following their research, belongingness to a group is associated with happiness and can

lead to an increase in personal well-being. At the same time Mead, Baumeister, Stillman, Rawn,

and Vohs (2011) state that socially excluded people tend to “sacrifice personal and financial

well-being for the sake of social well-being” (p.902). In other words, belonging to a group is of

great importance for individuals, both in an online or offline setting (i.e. physical friendships).

Hence it motivates people to take actions to get accepted by a social group. In addition, the fear

of being socially excluded encourages an individual to spend resources to avoid this from

happening. Consequently, it is evident that Facebook “R” is not too far-fetched.

In the context of social media, people are starting to associate themselves more and more with


35

these platforms. This research believes that the potential of the introduction of “Facebook R” is

immense and could make a change. Now the question arises why Facebook would be willing to

cooperate. Considering Facebook’s ever rising role in our society, along with the simultaneous

growth of society’s growing privacy concerns, Facebook could strengthen its brand image and

could take on a leading role in the formation of a healthy and positive retirement of its young

users. In economics one speaks of a typical “win-win” situation, and this study proposes this may

be one of those situations.

7.2 Personalized Statistics

Policy makers could display personalized statistics such as: in the last 2 months, the

participation rate in monthly information gathering process has increased by 62.5%. In fact, it

may ‘only’ have increased from 5% to 8%. This process needs to be continued until a certain

threshold of participants is reached so that a snowball effect is triggered. Here, apart from social

proof, framing (Tversky & Kahneman, 1981) and availability heuristics (Tversky & Kahneman,

1973) play a role. If the information about participations rates is customized and attractive for

distinct demographic groups, it could significantly increase the motivation of people to gather

pension information. This claim is supported by the current research. Young people tend to

follow their peer’s lead. Simply providing information such as “70% of your peers perceive

pensions as relevant” increases the likelihood to request pension information. People evaluate

themselves by comparing themselves to others, particularly to those with similar personal

characteristics (Goldstein et al., 2008) and “especially in novel, ambiguous, or uncertain

situations” (p.473). Researchers already found support for the claim that peer effects have the

potential to increase stock market entry (Kaustia & Knüpfer, 2012) or to reduce energy

consumption in neighbourhoods (Ayres, Raseman, & Shih, 2012). Dahl, Løken, & Mogstad,

(2012) claim that peer effects can last over time and tend to decay slowly. Consequently, in the

context of social programs, peers can lead to “[…] long-run equilibrium take-up rate which can

be substantially higher than in the absence of peer effects” (p.35). Everything being taken into


36

account, there are reasons to believe that similar results could occur with respect to young people

voluntarily requesting pension information. The policy makers’ task would be to incorporate the

current findings to create customized and attractive campaigns for youngsters, preferably as

young as highschoolers. The younger a person is, the easier he or she is to influence and the less

this person is resistant to peers’ influence (Steinberg & Monahan, 2007).

It appears that there are more feasible options to utilize social norms. Apart from the two options

provided and discussed in depth, one could think of targeting opinion leaders. Young people tend

to comply with opinion leaders they look up to. Park and Lessig (1977) call this informational

reference group influence. Hence, if a well-known celebrity (e.g. Justin Bieber or Cristiano

Ronaldo) were to announce at a public event that he cares for pensions and asks his fans to do

the same young people might comply and conform.

To sum up, policy makers should incorporate the findings of this study to increase the

attractiveness of pensions among youngsters. If people were rational, they would understand the

importance of pensions and would take the necessary steps on time. In reality, most people are

everything but rational and a secured retirement seems endangered. Therefore, policy makers

should be approaching major players in social media, or rethinking the provision of data. If the

government decides that a shift of the responsibilities and risks from centrally managed pensions

schemes (DB) to the individuals (DC) is necessary, they need to accommodate this shift and do

everything possible so that this shift is smooth and does not lead to decreased living standards of

future retirees. This study does not attempt to paint things too black, but the negative outcomes

in the USA call for cautiousness.

8. Conclusion

This research confirms that peers have an effect on graduates’ choices in regard to taking an

interest in pension information.

Interestingly, merely displaying peer’s choices lead significantly more participants into

requesting any additional information. This finding indicates that descriptive norms were


37

activated, in the sense that peer’s choices served as a cue to make the accurate decision of

requesting more information independently of its content (i.e. insurance, investments, pensions).

Observing that people before them were interested in getting more information increased the

percentage of people following them. Without that effect, 57% of the participants requested

additional financial information. 76% of participants in the treatment group requested any

additional information. This significant change supports Hypothesis 1, which stated that simply

displaying peers’ information increases an individual’s willingness to request any additional

financial information.

The second hypothesis of this research stated that displaying the information that peers perceive

pensions as the most relevant financial topic increases an individual’s willingness to request

pension-specific information. Only 28.4% of the participants were not exposed to the effect of

voluntarily requested pension-specific information, while an astonishing 44.6% of participants

exposed to the effect requested pension information. Hence, Hypothesis 2 is supported. To

further support Hypothesis 2, testing to ascertain if on requesting any information, providing the

peer effect increased the percentage of participants who subsequently requested pensions-

specific information. Indeed, the percentage of subjects increased by 19,5%. Apart from the

relevant general findings of Hypothesis 1, the specific pension-related cue (i.e. the pension

column displaying eleven ID numbers while the five remaining IDs were spread amongst

insurances and investments) served as a social proof. According to the theory, this cue induced a

significant amount of participants in the treatment group to request pensions information in

particular. Hence, the finding supports the idea that social proof is activated in participants’

decision-making process.

Hypothesis 3 states that students who strongly care for pensions are more willing to request

pension specific information. Since the peer effect is the only significant variable in the

regression, Hypothesis 3 is not supported. However, it provides further evidence for the fact that

peer influence was isolated and that social proof explains the choice of participants. Specifically,

participants in the treatment group were about 3.5 times more likely than people in the control

group to request pension information.


38

Overall, there is strong evidence that the results are associated with social norms. This research

suggests that norms can be established more easily than one could think. The principal

contribution of this study is that by establishing norms, policy makers can make use of these

insights to increase pension awareness amongst young people. This research, however, focuses

on the very first step of the long process of counteracting the problems born by an emerging shift

in European pension systems. This research builds on Duflo & Saez (2002, 2003) and extends

their finding that also younger age groups can be affected by social norms in the context of

pension decisions. Thus, this research contributes to the academic literature that links youngsters

influenced by social norms in pension decisions.

9. Future Research

As pointed out, Graduate Finance students decided to follow their programs because they are

aware of the importance of the field of finance and are likely to work, or aspire to work, for a

financial institute, a bank or something similar after graduation. It would be interesting to

replicate the same study with a larger sample to see if the results get confirmed. In spite of the

positive results and a clear observable trend, it would be interesting to see whether a larger

sample would yield results that are statistically more significant and therefore more valid and

generalizable.

As already indicated in the limitations, there is reason to believe that the effect on

undergraduates or youngsters with another educational background would be stronger. For

instance, undergraduates following the program “European Studies” are substantially younger

and less knowledgeable in the field of finance. The topic of pensions is most likely not at the top

of their minds. Therefore, a situation like this would be novel and uncertain. In line with

(Steinberg & Monahan, 2007) one would expect that these students are less resistant to external

influence and are more likely to follow their peers’ lead. Hence, this thesis believes that age

differences matter, however, this claim needs to be tested.

Furthermore, this study demonstrated that descriptive norms increase the willingness of students


39

to request pension information, following the idea that “if everyone is doing that it must be the

correct thing to do”. In future research, it would be interesting to test if this reasoning works the

other way around. Specifically, if only one out of 10 friends request pension information does it

lower the individual’s willingness to request pension information? Also, it would be interesting

to test whether there is a difference in the effectiveness of descriptive norms for youngsters

between individualistic and collectivistic nations. This study posits that people living in countries

considered collectivistic could be more heavily influenced by social norms than people living in

individualistic countries. At last, the results connected to Hypothesis 1 indicate that gender

difference exists in the willingness to request financial information. Future research should

elaborate on this. Therefore, a larger sample should be used to verify the results and, if verified,

possible motivations and explanations for this finding should be researched.


40

10. References

Acquisti, A., & Gross, R. (2006). Imagined communities: Awareness, information sharing, and

privacy on the Facebook. Paper presented at the Privacy enhancing technologies.

Amblee, N., & Bui, T. (2011). Harnessing the influence of social proof in online shopping: The

effect of electronic word of mouth on sales of digital microproducts. International

Journal of Electronic Commerce, 16(2), 91-114.

Axelrod, R. (1986). An evolutionary approach to norms. American political science review,

80(04), 1095-1111.

Ayres, I., Raseman, S., & Shih, A. (2012). Evidence from two large field experiments that peer

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11. Appendix Study 1

Appendix A The percentages are given in brackets (%) Male Female Total

Gender German Dutch Others Total

Nationality Pensions 6

(0.55) 5 (0.45)

11 8 (0.73)

2 (0.18)

1 (0.09)

11

Insurances 4 (0.29)

10 (0.71)

14 6 (0.43)

6 (0.43)

2 (0.14)

14

Investments 24 (0.69)

11 (0.31)

35 13 (0.37)

8 (0.23)

14 (0.4)

35

Total 34 26 60 27 16 17 60 Gender Differences Appendix B Independent Samples test Levene’s Test

for Equality of Variances


t-test for Equality Means

F Sig. t df Sig. (2-teiled)

Mean Difference


Investment care


3.526 0.065 2.99 71 0.004 0.627 0.210


2.64 27.80 0.013 0.627 0.237

Pension care


1.827 0.181 1.64 71 0.106 0.410 0.250


1.80 41.81 0.080 0.410 0.229


44

Insurance care


0.043 0.836 -1.20

71 0.232 -0.269 0.224


-1.23

35.56 0.228 -0.269 0.219

Nationality Differences Appendix C Descriptive statistics

N Mean SD Minimum Maximum Investment care Dutch

German Other Total

19 32 22 73

4.72 4.81 5.09 4.87

1.01 0.69 0.89 0.84

2.67 3.67 2.67 2.67

6 6 6 6

Pension care Dutch German Other Total

19 32 22 73

3.95 4.33 4.27 4.21

0.75 0.94 1.16 0.97

2.67 2.00 2.33 2.00

5.33 6 6 6

Insurance care Dutch German Other Total

19 32 22 73

4.56 4.80 4.58 4.67

0.78 0.81 0.98 0.85

3.33 2.33 2.33 2.33

6 6 6 6

ANOVA

Sum of Squares df Mean Square F Sig. Investment care Between groups

Within Groups Total

1.611 49.641 51.251

2 70 72

0.81 0.71

1.14 0.33

Pension care Between groups Within groups Total

1.882 65.311 67.193

2 70 72

0.94 0.93

1.01 0.37

Insurance care Between Groups Within Groups Total

0.978 51.576 52.554

2 70 72

0.49 0.74

0.66 0.52


45

Appendix D Regression 1 (Hypothesis 1)

Omnibus Tests of Model Coefficients Chi-square df Sig. Step 1 Step 11.365 2 .003

Block 11.365 2 .003 Model 11.365 2 .003

Model Summary Step -2 Log likelihood Cox & Snell R Square Nagelkerke R Square 1 81.097a .144 .201 a. Estimation terminated at iteration number 4 because parameter estimates changed by less than ,001.

Variables in the Equation B S.E. Wald df Sig. Exp(B) Step 1a Effect .857 .546 2.460 1 .117 2.355

Male 1.618 .574 7.934 1 .005 5.042 Constant -.808 .538 2.259 1 .133 .446

a. Variable(s) entered on step 1: Effect, Male.

Appendix E Regression 2 (Hypothesis 3)

Omnibus Tests of Model Coefficients

Chi-square df Sig.

Step 1 Step 5.026 5 .413

Block 5.026 5 .413

Model 5.026 5 .413

Model Summary


46

Step -2 Log likelihood Cox & Snell R Square Nagelkerke R Square

1 63.371a .067 .109

a. Estimation terminated at iteration number 5 because parameter estimates changed by less than ,001.

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

Step 1a Effect 1.236 .726 2.898 1 .089 3.442

Pension_care .294 .383 .590 1 .442 1.342

Mod_Pension_Effect .066 .377 .031 1 .860 1.068

Mod_Gender_Effect .019 .366 .003 1 .958 1.020

Male -.053 .802 .004 1 .947 .948

Constant -3.551 1.707 4.327 1 .038 .029

a. Variable(s) entered on step 1: Effect, Pension_care, Mod_Pension_Effect, Mod_Gender_Effect, Male.

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