How much to save? Decision costs and retirement plan participation

Jacob Goldin, Tatiana Homonoff, Richard Patterson and William Skimmyhorn

Journal of Public Economics, 2020, vol. 191, issue C

Abstract: Deciding how much to save for retirement can be complicated. Drawing on a field experiment conducted with the Department of Defense, we study whether such complexity depresses participation in an employer-sponsored retirement saving plan. We find that simplifying one dimension of the enrollment decision, by highlighting a potential rate at which non-participants might contribute, increases participation in the plan. Similar communications that did not include a highlighted rate yield smaller effects. The results highlight how reducing complexity on the intensive margin of a decision (how much to contribute) can affect extensive margin behavior (whether to contribute at all) in a setting of policy interest.

Keywords: Retirement savings; Complexity; Nudges; Decision costs; Household finance (search for similar items in EconPapers)
JEL-codes: D14 D91 G41 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:191:y:2020:i:c:s0047272720301110

DOI: 10.1016/j.jpubeco.2020.104247

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