Keywords
choice architecture, nudge, default, automatic enrollment, savings, 401(k), defined contribution plan, plan design, heterogeneity
Abstract
Identifying who is more influenced by a default is challenging, since individuals may be more likely to remain at the default either because they are more susceptible to defaults in general or because the default is closer to their preferred choice. We apply a statistical model to ten large companies’ 401(k) plans to distinguish between these two channels. Even after controlling for contribution rate preferences, low-income and young individuals are slower to opt out of contribution rate defaults. The evidence is consistent with the default changing contribution rate preferences, as predicted by anchoring or endorsement effects, and there is weaker evidence that low-income and young employees are more affected.
Original Publication Citation
“Who Is Easier to Nudge?” 2015 (with John Beshears, James J. Choi, David Laibson and Sean Wang).
BYU ScholarsArchive Citation
Beshears, John; Choi, James J.; Laibson, David; Madrian, Brigitte C.; and Wang, Sean (Xixiang), "Who Is Easier to Nudge?" (2016). Faculty Publications. 9110.
https://scholarsarchive.byu.edu/facpub/9110
Document Type
Peer-Reviewed Article
Publication Date
2016
Publisher
National Bureau of Economic Research
Language
English
College
Marriott School of Business
Department
Finance
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