Efficiency in Household Decision Making: Evidence from the Retirement Savings of U.S. Couples

Taha Choukhmane, Lucas Goodman and Cormac O'Dea

No 31195, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how couples allocate retirement-saving contributions across each spouse's account. In a new dataset covering over a million U.S. individuals, we find retirement contributions are not allocated to the account with the highest employer match rate. This lack of coordination—which goes against the assumptions of most models of household decision-making—is common, costly, persistent over time, and cannot be explained by inertia, auto-enrollment, or simple heuristics. Complementing the administrative evidence with an online survey, we find that inefficient allocations reflect both financial mistakes as well as deliberate choices—especially when trust and commitment inside the households are weak.

JEL-codes: D13 D15 D19 J12 (search for similar items in EconPapers)
Date: 2023-04
New Economics Papers: this item is included in nep-age, nep-des and nep-lab
Note: AG PE
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