Who Feels the Nudge? Knowledge, Self-Awareness and Retirement Savings Decisions
Anders Anderson and
David Robinson ()
No 25061, NBER Working Papers from National Bureau of Economic Research, Inc
Using a financial literacy survey of Swedish pension investors matched to actual retirement savings decisions, we argue that respondents can be broken into three groups: those who are financially literate, those who mistakenly believe they are financially literate, and those who know that they are not. We examine how these groups respond differently to informational nudges encouraging them to take charge of their own investments. Investors with mistaken beliefs responded to the nudge, and were more likely to work with mass-market advisors who steer them into high-fee funds. They underperform as a result. By comparison, those who either possess financial literacy or else understand that they do not possess financial literacy were less likely to respond to the nudge. They avoided advisors, stayed with the low-cost default fund, and therefore accumulated retirement savings more quickly.
JEL-codes: G11 G18 G4 G41 (search for similar items in EconPapers)
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