Working Paper: NBER ID: w31195
Authors: Taha Choukhmane; Lucas Goodman; Cormac O'Dea
Abstract: We study how couples allocate retirement-saving contributions across each spouse's account. In a new dataset covering over a million U.S. individuals, we find retirement contributions are not allocated to the account with the highest employer match rate. This lack of coordination—which goes against the assumptions of most models of household decision-making—is common, costly, persistent over time, and cannot be explained by inertia, auto-enrollment, or simple heuristics. Complementing the administrative evidence with an online survey, we find that inefficient allocations reflect both financial mistakes as well as deliberate choices—especially when trust and commitment inside the households are weak.
Keywords: Household Decision-Making; Retirement Savings; Pareto Efficiency
JEL Codes: D13; D15; D19; J12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Coordination (P11) | Retirement Savings Efficiency (D14) |
| Marital Status (J12) | Decision-Making Efficiency (D91) |
| Marital Commitment (J12) | Noncoordination (P11) |
| Noncoordination (P11) | Inefficient Allocations (D61) |
| Marital Commitment (J12) | Retirement Savings Efficiency (D14) |