I’ve seen it first hand with many employees eligible to participate in 401(k) plans. That is, employees who choose not to save for retirement. Sometimes, there’s a logical and personal reason. But sometimes, it’s just … procrastination.

And that part of it, I could never understand. But I now have a little more insight thanks to an article written by Steve Martin in the November 9, 2010 issue of Inside Influence Report. Mr. Martin alliteratively writes about the persuasive pull of procrastination.

Mr. Martin looks at recent research that explains why many people find it easy to come up with excuses that put off things for some time in the future. Not just unpleasant tasks, mind you, but things like saving money.

The research he cites is the article Procrastination of Enjoyable Experiences, Journal of Marketing Research (2010 in press), written by Suzanne Shu from the Anderson School of Management at UCLA and Ayelet Gneezy from the University of California in San Diego.

Here’s what their study was about. They offered participants a gift certificate good for coffee and cake at a high-end local bakery. Some participants were offered gift certificates that would expire in three weeks and another that would expire in two months.

When asked when they would use the gift certificates, more participants in the two-month group said they would use the certificate than did the three-week group (68% vs. 50%). The reality was quite different. About a third of the three-week group redeemed theirs, but only 6% of the two-month certificate redeemed theirs.

But how do we know that the results of the study were caused by procrastination and not something else. Mr. Martin tells us:

In order to ensure that the results of the study were attributable principally to procrastination and not another factor or reason, a series of follow up surveys were completed. Those who did redeem the certificates reported an enjoyable and worthwhile experience. Those that didn’t redeem them conveyed their regret and were most likely to agree with  statements such as “I got too busy and ran out of time” or “I kept thinking that I would do it a bit later.” There was a much lower agreement to statements such as “I forgot” and “I don’t like pastries” or “It seemed like too much effort.”

So lets relate this study to 401(k) procrastination. Are there employees who think the same way? Particularly, “I kept thinking that I would do it a bit later.” or “It seemed like too much effort.” You bet there are. 

This is exactly what automatic enrollment addresses, or as I said a while back, 401(k) automatic enrollment or how to overcome employee inertia.  

Picture credit: Kevin’s Practical Hacks blog post, 6 Simple Steps To Conquer Procrastination.