Working Paper: NBER ID: w21467
Authors: James J. Choi
Abstract: Defined contribution (DC) pensions are an increasingly important means of financing retirement consumption. Because individuals often have substantial discretion over how much is contributed to their DC pension, studying DC contribution choices provides general insights into the determinants of individual economic decision-making. The literature has found strong deviations from many predictions of classical frictionless optimizing models. I provide an overview of the U.S. DC pension system and review the literature on the effect of matching contributions, automatic enrollment, active choice deadlines, choice overload, financial literacy, peer effects, mental accounting, and personal experience on individuals’ DC contributions.
Keywords: No keywords provided
JEL Codes: D14; J32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial Literacy (G53) | Participation Rates (J49) |
| Matching Contributions (D64) | Participation Rates (J49) |
| Peer Participation Rates (H49) | Individual Participation Rates (J49) |
| Automatic Enrollment (H55) | Participation Rates (J49) |