Trust, plan knowledge and 401(k) savings behavior*

Julie R. Agnew, Lisa R. Szykman, Stephen P. Utkus and Jean A. Young

Journal of Pension Economics and Finance, 2012, vol. 11, issue 1, 1-20

Abstract: Plan knowledge and trust in financial institutions – two variables missing from standard neoclassical or behavioral models of decision-making – are strongly correlated to 401(k) savings behavior based on results from this paper. In voluntary enrollment settings, plan knowledge and demographic characteristics are related to participation in a 401(k) plan. In automatic enrollment settings, trust in financial institutions and knowledge of an available plan match are related to participation. Although this study cannot prove causality of the relationships, it does extend our understanding of the complex factors underlying savings choices. Policy implications are discussed.

Date: 2012
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