Keywords
automatic enrollment, 401(k) participation, default effects
Abstract
Previous research has shown that 401(k) participation increases dramatically when companies switch from an opt-in to an opt-out (or automatic) enrollment regime (Madrian and Shea 2001; Choi et al. 2004; Choi et al. 2006). Although automatic enrollment has been widely touted as an effective tool for encouraging saving, it has its detractors. Some libertarians dislike automatic enrollment because they view it as coercing individuals into the company-chosen default contribution rate and asset allocation. Indeed, the vast majority of automatically enrolled employees passively accept all of the defaults in the short run, and many remain at those defaults for years (Choi et al. 2004; Choi et al. 2006).
Original Publication Citation
“Reducing the Complexity Costs of 401(k) Participation through Quick EnrollmentTM.” 2009. In David A. Wise, editor, Developments in the Economics of Aging, Chicago: University of Chicago Press, pp. 57-82 (with James J. Choi and David Laibson). http://www.nber.org/chapters/c11310.pdf
BYU ScholarsArchive Citation
Choi, James J.; Laibson, David; and Madrian, Brigitte C., "Reducing the Complexity Costs of 401(k) Participation through Quick Enrollment" (2009). Faculty Publications. 9059.
https://scholarsarchive.byu.edu/facpub/9059
Document Type
Peer-Reviewed Article
Publication Date
2009
Publisher
University of Chicago Press
Language
English
College
Marriott School of Business
Department
Finance
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