Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance

James Jinwoo Choi, David Laibson (), Brigitte C. Madrian and Andrew Metrick ()

No 8655, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We assess the impact on savings behavior of several different 401(k) plan features, including automatic enrollment, automatic cash distributions, employer matching provisions, eligibility requirements, investment options, and financial education. We also present new survey evidence on individual savings adequacy. Many of our conclusions are based on an analysis of micro-level administrative data on the 401(k) savings behavior of employees in several large corporations that implemented changes in their 401(k) plan design. Our analysis identifies a key behavioral principle that should partially guide the design of 401(k) plans: employees often follow 'the path of least resistance.' For better or for worse, plan administrators can manipulate the path of least resistance to powerfully influence the savings and investment choices of their employees.

JEL-codes: J32 H55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2001-12
Note: AG AP PE
View list of references View citations in EconPapers

Downloads: (external link)
http://www.nber.org/papers/w8655.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html.

Related works:
Working Paper: Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:nbr:nberwo:8655

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8655
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc
Address: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Contact information at EDIRC.
Series data maintained by ().