by Jamie Lee

THE Singapore government designed a standard plan for the CPF Life Scheme which, by default, is seen as appropriate for most Singaporeans - a situation which could be explained by behavioural economics, said Minister in charge of the civil service and Minister for Defence Teo Chee Hean yesterday.

While there are 'about a dozen plans' that Singaporeans could choose from, the government set a standard scheme to help older Singaporeans make up their minds, while offering other options, Mr Teo noted in the opening address of the first Gallup Global Behavioural Forum.

'This is a new and potentially complicated programme,' he said. 'Many older Singaporeans may not be able to work out which plan was best for them. Hence, we decided that the default would be a standard plan which we think would be appropriate for most Singaporeans.'

CPF Life, the new national annuity scheme, set the payout age of 80 as the default plan for retirees.

The government has said that it expects most Singaporeans to accept this option. The government took the same approach with other policies such as organ donation, Mr Teo added.

Behavioural economics could also explain Singapore's dire fertility rates, which have fallen to below 1.3 for the last five years following a successful 'Stop at Two' policy introduced in the 1960s to dissuade Singaporeans from having too many children.

'In spite of various financial incentives and campaigns since 1987, total fertility rate has continued to fall,' he said.

'Perhaps behavioural economists might see this as a form of 'loss aversion' - where people respond more to penalties and disincentives than they do to reward or incentives.'

Singapore has also gained a reputation for being a 'fine city' with its carrot and stick approach to shape behaviour, while using many campaigns to change preferences and norms over a longer period through such 'active educational programmes', he added.

This article was first published in The Straits Times on June 27, 2008.