Working Paper: NBER ID: w18220
Authors: Brigitte C. Madrian
Abstract: Including a matching contribution increases savings plan participation and contributions, although the impact is less significant than the impact of nonfinancial approaches. Conditional on participation, a higher match rate has only a small effect on savings plan contributions. In contrast, the match threshold has a substantial impact, probably because it serves as a natural reference point when individuals are deciding how much to save and may be viewed as advice from the savings program sponsor on how much to save. Other behavioral approaches to changing savings plan outcomes--including automatic enrollment, simplification, planning aids, reminders, and commitment features--potentially have a much greater impact on savings outcomes than do financial incentives, often at a much lower cost.
Keywords: matching contributions; savings outcomes; behavioral economics; pension systems; financial incentives
JEL Codes: D14; D91; G23; H31; J32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Matching Contributions (D64) | Savings Plan Participation (H55) |
| Match Rate (C52) | Contributions (D64) |
| Match Threshold (C24) | Contribution Behavior (D64) |
| Non-Financial Approaches (G19) | Savings Outcomes (G51) |