$100 Bills on the Sidewalk: Suboptimal Investment in 401(k) Plans

James Choi, David Laibson and Brigitte Madrian

The Review of Economics and Statistics, 2011, vol. 93, issue 3, 748-763

Abstract: We identify employees at seven companies whose 401(k) investment choices are dominated because they are contributing less than the employer matching contribution threshold despite being vested in their match and being able to make penalty-free 401(k) withdrawals for any reason because they are older than 59½. At the average firm, 36% of match-eligible employees over age 59½ forgo arbitrage profits that average 1.6% of their annual pay, or $507. A survey educating employees about the free lunch they are forgoing raised contribution rates by a statistically insignificant 0.67% of income among those completing the survey. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (99)

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00100 link to full text (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: $100 Bills on the Sidewalk: Suboptimal Investment in 401(K) Plans (2009)
Working Paper: $100 Bills on the Sidewalk: Suboptimal Investment in 401(k) Plans (2005)
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: https://EconPapers.repec.org/RePEc:tpr:restat:v:93:y:2011:i:3:p:748-763

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().