Skip a New Year’s Resolution and Make Jan. 2 ‘Defaults Day’ Instead

Every January, gyms swell with hopeful new members. By March, early resolve gives way to scheduling conflicts and competing priorities, even as monthly fees keep adding up. Gyms around the world thank you for your resolutions — and are happy to auto-renew you throughout the year even if you don’t attend.

This year, try something different: Mark Jan. 2 as what we’ll call a “Defaults Day.” That means blocking off time to make a list of the many decisions that are made by default in your life, including subscriptions that auto-renew and your retirement plan savings rate. Change the ones you don’t like. Keep the ones you do.

t’s almost impossible to start a new year without thinking about self-improvement. But unlike many resolutions, the beauty of auditing your defaults is that you just need to make the change once. Then you can sit back and enjoy the benefits all year long.

The Power of Defaults

Pop quiz: How much are you putting into your retirement plan? For many of us, the answer is whatever our employers set as the default contribution rate. This means that people with very different feelings about how much they should be putting away end up with exactly the same share of their income going toward a retirement nest egg. And all too often that amount is zero: A study of employees at one company found that people were 28 percentage points more likely to enroll up front in their plan when required to make an active choice (that is, “enroll” or “don’t”) relative to their existing system in which employees had to opt in.

Retirement savings may be a particularly consequential case of making wrong decisions out of inertia or inattention, but as it turns out, our choices are routinely determined by default rather than active consideration. There are the memberships and subscriptions we sign up for then rarely use. The boxes for auto renewal often come prechecked, making it easier for free trials to silently transition to recurring monthly charges. Rarely do we stop to consider how defaults silently guide our decisions.

To be clear, defaults aren’t all bad. Imagine if you actually had to actively renew your gym membership every month. Or go through and check every box on a sign-up form before the application went through. Defaults simplify decisions, taking them out of our hands and putting them in someone else’s. The problem is that the “someone else” may not know or cater to your best interests. If your employer doesn’t automatically enroll you in a retirement plan, does that mean you should skip out on retirement savings? And do you really want to trust your credit card companies and streaming services to make your contract renewal decisions?

There are various reasons we come to be reliant on defaults, all of which leave some room for manipulation by companies aiming to keep us paying for their services. In some cases, we may interpret a default as a recommendation. After all, why else make it the default? In other cases, we might feel it’s not worth the time to think about a decision. And, at times, we may just not think about it at all — allowing inattention to drive our choices. Companies can also go out of their way to direct us toward the default choices that are most profitable for them. It’s well worth asking whether sticking with the default is the right choice for you.

As two behavioral economists well versed in the frailties of human judgment, we would like to think we are immune to default bias, but we’re most definitely not. Both of us are as guilty of ignoring our collection of defaults as anyone. We too have our never-ending magazine and streaming subscriptions. Defaults Day is our attempt to regain control of our choices.

To see the potential payoff of getting off the auto-renewal treadmill, it’s helpful to have a sense of how pervasive default effects are and how harmful they can be. A recent paper on Medicare Part D — the US government’s drug benefit plan — found that 90% of beneficiaries enrolled in the default option, even as it moved around from year to year, and even when it didn’t cover as many of their needed prescriptions. In Germany, consumers were almost 10 times as likely to pay for pricier energy plans that relied on renewable power when those plans were selected by default (with the option to opt out) than when they were defaulted into the standard energy plan with an option to opt in on renewables. It may be socially desirable for customers to pay more for green energy, but these findings suggest that, for many, it was the result of default bias.

Audit Your Defaults

To get started on your own Defaults Day, look through your subscriptions and memberships to see which have auto-renewed; flipping through recent credit card bills or bank statements may help to jog your memory.

Streaming services can be a good starting point. As both of our spouses can attest, we’re often guilty of signing up for a new streaming service for a single show. Mike subscribed to Apple TV to watch Ted Lasso. Ray signed up for a Paramount+ trial to watch the football playoffs and, were it not for this article, would already have forgotten about canceling it. While going through our streaming subscriptions, we also ended up discovering other subscriptions we’d signed up for over the years — Uber One, Instacart+, an app for tuning ukuleles, and a scanner for nutritional information at grocery stores, to name a few.

Second, update your retirement contribution rate. As mentioned above, changing the default rate on your contributions can lead to surprisingly large shifts in savings. It’s a reminder of the power of defaults. Take some time to think about your financial situation and retirement goals, and what they mean for how much you should put away. Then update the setting accordingly. Once you make the change, your retirement savings will be on autopilot for the year.

Third, take out your smartphone. Look at the home screen: Unless you’ve programmed it manually, your phone has determined which apps should be front and center. Think about the small number of apps you use (or would like to use more) and take 20 minutes to change your settings so they’re easier to find.

In the digital age, default settings are a powerful tool that platforms use to steer our decisions. Google, for example, pays billions of dollars per year to be the default search engine on many web browsers and mobile phones, whether you want to use it or not. Ultimately, Google’s conduct led the US District Court for the District of Columbia to conclude that the company had engaged in anticompetitive behavior, limiting “rivals’ opportunities to compete.” Mike testified in the remedies phase of the case, and policy is an important part of the solution. In the meantime, you can also take matters into your own hands, setting a default search engine that’s best for you.

Conducting a defaults audit can better align your daily choices with your long-term goals, making passive decisions active. Here’s one more easy one to get you started, one that’s also altruistic: Check your organ donor status. The US has an opt-in system for organ donations, meaning that the default is not to be a donor. Opt-in systems tend to have lower organ donation rates relative to opt-out systems. There’s a lot of research exploring the merits of different approaches, so one thing we can all do is think about whether to update our own status to become an organ donor.

Set New Defaults

In addition to changing defaults that were set for you, you can also create new defaults for yourself. Truly set on making a fitness resolution this year? Rather than just signing up for the gym, set a recurring calendar appointment. For instance, last year one of us started working out at the same time each week with a trainer. When the time doesn’t work, we reschedule — but this puts a default time (and a commitment device) in place. Do you want to schedule more date nights with your partner? Prebook a regular sitter each month. You can always opt out if something comes up, but having prescheduled defaults can help you do, by default, the things you wish you’d do more of.

Like so many other resolutions, there’s still some chance that, by February, your workouts and date nights will be on ice again. But the more you make them happen by default, the better the chance you give yourself of following through.

Once you’ve stripped your life of subscriptions, memberships and other baggage you’ve acquired by default, you might, as one final step, set up a specific day each month or each year to repeat the exercise. Your life circumstances may have changed, and another year will surely bring more decisions-by-default to be scrutinized or reconsidered.

Ray Fisman is the Slater Family Professor in Behavioral Economics at Boston University. Michael Luca is a professor and the director of the Technology and Society Initiative at the Johns Hopkins University, Carey Business School.