Using nudges to increase private saving: design and evaluation of a new policy combining rents and saving funds in Milan

This Master thesis represents an attempt to propose a new policy that uses nudges to increase private saving. It lies on the consideration that, nowadays, younger generations save less than many other categories of people and, most of all, do not save enough for their late life. The current retirement plans offered by many industrialized countries do not offer a proper protection to future retirees and will provide them with lower and lower pension cheques. From this scenario, the necessity of saving more privately acquires even more importance than in the past. Three biases are responsible for people’s scarce accumulation of savings: procrastination, loss aversion and present bias. The nudge here proposed involves a mechanism that is designed to automatically deviate part of the rent paid by the subject for an apartment in Milan to a private fund, where savings are automatically accumulated. It would involve the help of the municipality of Milan and a bank. The purpose of the nudge is to increase money in the private fund and make people richer in savings.