Working Paper: NBER ID: w20949
Authors: Jeffrey R. Brown; Anne M. Farrell; Scott J. Weisbenner
Abstract: This paper examines heterogeneity in the responsiveness to default options in a large state retirement plan, focusing on individuals’ decision-making approaches as well as their economic and demographic characteristics. Using a survey of plan participants, we find that procrastination and the need for cognitive closure are important determinants of the likelihood of default. We also explore an important implication of defaulting – individuals who default are significantly more likely to subsequently express a desire to enroll in a different plan. The desire to change plans is also correlated with numerous economic and decision-making characteristics, including procrastination.
Keywords: default options; behavioral economics; retirement planning
JEL Codes: D03; D14; G11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Procrastination (D15) | Likelihood of Default (G33) |
| Need for Cognitive Closure (D80) | Likelihood of Default (G33) |