Working Paper: NBER ID: w30697
Authors: Richard W. Patterson; William L. Skimmyhorn
Abstract: Information provision, choice simplification, social messaging, active-choice frameworks, and automatic enrollment all increase retirement savings. However, gauging the relative efficacy of these approaches is challenging because the supporting evidence spans widely different institutional settings, populations, and time periods. In this study, we leverage experimental and quasi-experimental variation in a constant setting, the U.S. military between 2016-2018, to examine the effects of nearly two dozen experiments for four leading policy options (i.e., information emails, action steps, target contribution rates, active choice, and automatic enrollment) designed to increase retirement savings. Consistent with previous literature, we find sizable effects of savings interventions on participation and cumulative contributions that increase with the intensity of the intervention. We then exploit cost data to complete the first cost-effectiveness analysis in the literature. Our analysis suggests that active choice programs are the most cost-effective method to generate new program participation and contributions for small, medium, and large firms, while automatic enrollment is more cost-effective for very large firms.
Keywords: retirement savings; behavioral interventions; cost-effectiveness; U.S. Army; automatic enrollment; active choice
JEL Codes: D14; D91; G41; G51; J45
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| light-touch email interventions (C91) | participation in employer-sponsored retirement plans (J26) |
| active choice interventions (D91) | contributions (D64) |
| automatic enrollment (H55) | participation (D16) |
| light-touch email interventions (C91) | contributions (D64) |
| automatic enrollment (H55) | participation for younger individuals (I24) |
| automatic enrollment (H55) | participation for minority backgrounds (J15) |
| active choice interventions (D91) | higher benefits for older individuals (H55) |