Working Paper: NBER ID: w27575
Authors: Jacob Goldin; Tatiana Homonoff; Richard W. Patterson; William L. Skimmyhorn
Abstract: Deciding how much to save for retirement can be complicated. Drawing on a field experiment conducted with the Department of Defense, we study whether such complexity depresses participation in an employer-sponsored retirement saving plan. We find that simplifying one dimension of the enrollment decision, by highlighting a potential rate at which non-participants might contribute, increases participation in the plan. Similar communications that did not include a highlighted rate yield smaller effects. The results highlight how reducing complexity on the intensive margin of a decision (how much to contribute) can affect extensive margin behavior (whether to contribute at all) in a setting of policy interest.
Keywords: Retirement Savings; Decision Costs; Participation; Field Experiment
JEL Codes: D14; G41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| highlighting a specific contribution rate (E25) | increases participation in the retirement savings plan (D14) |
| specific rate treatment (C22) | concentration of contributions at the highlighted rate (D30) |
| intervention did not merely speed up enrollment (I24) | encouraged new participants who would otherwise not have enrolled (I24) |