EconPapers    
Economics at your fingertips  
 

Less Is Not More: Information Presentation Complexity and 401(k) Planning Choices

Eric Cardella (), Charlene Kalenkoski and Michael Parent ()
Additional contact information
Eric Cardella: Texas Tech University
Michael Parent: University of Texas at Austin

No 11538, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper presents the results of an experiment that is designed to examine how information presentation and complexity impact retirement-savings behavior. The experiment is performed twice, using both a Qualtrics panel of new employees and a sample of business school students. In this experiment, participants first were provided with either a long or short description of a hypothetical employer-sponsored 401(k) plan. Then they were asked whether they would enroll in the hypothetical plan and, if so, what percentage of their salary they would contribute. If they chose to contribute, they were asked how they would like to allocate their contribution between stocks and bonds. Participants were offered the option to stick with pre-assigned default options such as a 4% contribution and a 50-50 stocks and bonds split. The hypothesis is that providing concise information with helpful recommendations would improve choices over providing lengthy and detailed information. However, controlling for demographic and other factors, this hypothesis was not supported by the data, for either the new employees or the business school students. Thus, the data suggest that simplifying the presentation of retirement-plan information to employees is unlikely to result in vastly improved retirement-planning choices.

Keywords: retirement planning; 401(k); information complexity; nudge; choice architecture (search for similar items in EconPapers)
JEL-codes: G11 G41 H31 J32 D83 C90 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-cbe and nep-exp
Date: 2018-05
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://ftp.iza.org/dp11538.pdf (application/pdf)

Related works:
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:iza:izadps:dp11538

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().

 
Page updated 2019-12-04
Handle: RePEc:iza:izadps:dp11538