Buffets, Birthdays & Bank‑Lotteries: Three Research‑Backed Tweaks to Make Your Money Work Harder This Week
Plus your 5-Minute 'Ad-Detox"
Welcome back to the MOAM weekly newsletter, as always each Monday I round up 2-3 academic studies discussing personal finance, and I provide analysis to see if these ideas are worth your time.
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#1 Why “Even‑Slices” Portfolios Go Sideways
This is a classic paper from Shlomo Benartzi & Richard Thaler titled, "Naïve Diversification Strategies in Defined‑Contribution Saving Plans.”
This paper examines a common problem that DIY investors face—how to diversify your portfolio. Many investors in a Defined Contribution retirement plan will spread their money evenly across all the funds that are offered to them.
This is kind of like walking into an all‑you‑can‑eat buffet with ten dishes and scooping a little of everything onto your plate.
Which might be fine with lunch—but can lead to problems with your money.
Benartzi and Thaler suspected that workers treat 401(k) menus exactly like buffets, mindlessly dividing contributions across whatever funds are offered rather than thinking about risk.
To test the hunch they secured payroll data from a big U.S. university and watched real employees allocate money across 10-18 funds.
They followed up with laboratory simulations where volunteers built pretend portfolios from menus the researchers controlled—sometimes stock‑heavy, sometimes bond‑heavy.
Across both settings the pattern was unmistakable: the more stock funds on the list, the more stocks people bought, even when that meant owning a portfolio far riskier (or safer) than they intended.
The paper remain relevant today because it showed that “diversification” can be an illusion; it’s not that investors love a 90% equity portfolio, it’s that the menu nudged them there.
Later studies in Australia, Canada, and the U.K. replicated the bias, cementing the “1/N” rule as one of behavioral finance’s most stubborn errors.
Results
1/N everywhere: Roughly one‑third of employees split money equally across every fund offered—no matter the underlying stock/bond mix.
Menu dictates risk: Shift the menu from 50 % stock funds to 70 % and average equity exposure jumps about five percentage points.
Fee blindness: High‑cost funds received the same slice as low‑cost ones, quietly eroding long‑run returns.
What it means for your wallet
Run a 60‑second audit: Count how many stock versus bond funds you actually own; the ratio may shock you.
Default to a target‑date or all‑in‑one ETF so menu design can’t hijack your allocation.
Rename funds in your tracker: Label holdings by role—“Canadian Equity,” “Global Bonds”—to keep asset class, not marketing flair, front‑and‑centre.
For a more detailed breakdown of what ‘rational’ diversification looks like read this:
#2 The Science Behind “New‑Week, New‑Me”
We’ve all felt the Monday‑morning resolve that this week we’ll eat better, work out, or finally open that investment account.
In this his paper titled, The Fresh‑Start Effect, researchers Dai, Milkman, and Riis set out to prove that these “temporal landmarks”—first day of the week, month, year, birthdays—really do re‑wire our motivation and lead to real action.
They started with mountains of archival data: billions of Google searches showed that “diet” queries spike on Mondays; swipe‑card logs from a U.S. gym chain revealed attendance bumps right after birthdays.
But the researchers wanted more than correlations, so they persuaded a Fortune 500 company to run a giant experiment. Nearly 400,000 employees received e‑mails inviting them to raise their 401(k) contributions.
Half the messages framed the increase as something to start “after your next birthday” or “next month,” while the other half used a plain, no‑landmark prompt.
The landmark framing worked incredibly well.
People seemed to draw a motivational line between “old me” and “new me,” giving them psychological permission to ditch past procrastination and act right now. The finding reshaped how HR departments, health‑app designers, and even governments time their nudges.
Results
Landmark spikes: Google “diet” searches rise 14 % on Mondays; gym visits climb 33 % following birthdays.
Bigger savings bumps: Landmark‑framed e‑mails triggered a 28 % increase in 401(k) contribution changes compared with neutral messages.
Mental reset button: Temporal landmarks create a clear split between past and present selves, unlocking fresh motivation.
What it means for your wallet
Schedule money rituals: Set a repeating calendar invite for the first Monday of every month that includes goals such as review spending, raise savings by 0.5 %, rebalance.
Use birthdays as checkpoints: Celebrate by giving Future‑You a raise in the form of higher automatic savings.
Combine timing with automation: A shiny “fresh start” fades fast without an auto‑draft backing it up. Just remember the golden rule of automated savings: Only automate what your budget will allow you to save.
Here’s a more detailed deep-dive on using temporal framing:
#3 Lottery Tickets Inside Your Savings Account
Paper: Paul Gertler, Sean Higgins, Aisling Scott & Enrique Seira, “The Long‑Term Effects of Temporary Incentives to Save: Evidence from a Prize‑Linked Savings Field Experiment,” J‑PAL Working Paper, 2018 –
Scratch‑tickets and Powerball remain popular because they promise you a shot at riches (even if that shot is so small it’s no-more than an illusion.)
Prize‑linked savings (PLS) flips that promise on its head—Where people who open a savings account are incentivized to save by entering into a type of lottery if they hit a savings threshold.
To see whether the concept really moves money, Gertler and colleagues partnered with a large Mexican bank and randomly selected 110 branches for a two‑month trial.
Customers earned a ticket for each deposit of 50 pesos or more, with cash jackpots replacing the usual trickle of interest.
During the promo, new accounts flooded in.
But the real surprise arrived years later: balances in those accounts stayed higher than in control branches long after the lottery ended. In other words, a short burst of gamified excitement seeded a durable savings habit—even among households that had never used a bank before.
Follow‑up studies in U.S. credit unions and U.K. building societies find similar stickiness, suggesting PLS can pull people from pure gambling into genuine saving.
Results
+41 % account openings in PLS branches during the promo period.
Balances 1.4× higher five years later, despite the lottery ending after two months.
Greater financial inclusion: New savers were disproportionately low‑income and first‑time bank users.
What it means for your wallet
Find a PLS product: Canadian credit unions run “WIN‑savings” draws; U.S. apps like Yotta replicate the model.
Redirect lottery spend: Swap $10/week in tickets for a $10/week PLS deposit—thrill intact, expected return flipped positive.
Jump‑start an emergency fund: Early excitement can hard‑wire the habit; keep depositing even after the novelty fades.
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Each week, I share an actionable behavioral economics exercise designed to help improve your financial decision-making.