Working Paper: NBER ID: w10185
Authors: Sewin Chan; Ann Huff Stevens
Abstract: This paper provides an answer to an important empirical puzzle in the retirement literature: while most people know little about their own pension plans, retirement behavior is strongly affected by pension incentives. We combine administrative and self-reported pension data to measure the retirement response to actual and perceived financial incentives. We find that well-informed individuals are five times more responsive to pension incentives than the average individual when knowledge is ignored. We further find that the ill-informed individuals do respond to their own misperception of the incentives, rather than being unresponsive to any incentives.
Keywords: Pension Knowledge; Retirement Decision Making; Financial Incentives
JEL Codes: J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pension knowledge (H55) | responsiveness to pension incentives (H55) |
| pension gain (H55) | retirement probability (J26) |
| uninformed individuals (D89) | response to retirement incentives (J26) |
| ill-informed individuals (D83) | misperception of incentives (D91) |