Working Paper: NBER ID: w12659
Authors: John Beshears; James J. Choi; David Laibson; Brigitte C. Madrian
Abstract: The daunting complexity of important financial decisions can lead to procrastination. We evaluate a low-cost intervention that substantially simplifies the retirement savings plan participation decision. Individuals received an opportunity to enroll in a retirement savings plan at a pre-selected contribution rate and asset allocation, allowing them to collapse a multidimensional problem into a binary choice between the status quo and the pre-selected alternative. The intervention increases plan enrollment rates by 10 to 20 percentage points. We find that a similar intervention can be used to increase contribution rates among employees who are already participating in a savings plan.
Keywords: retirement savings; financial decisions; behavioral economics
JEL Codes: D12; D14; D83; G11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| quick enrollment intervention (I24) | savings plan enrollment rates (H55) |
| repeated quick enrollment opportunities (I24) | cumulative increase in enrollment rates (I24) |
| easy escalation (Y60) | increased contribution rates (H55) |
| quick enrollment intervention (I24) | durable participation increases (C41) |
| quick enrollment intervention (I24) | simplify decision-making process (D91) |