Employer-Based Short-Term Savings Accounts

Sarah Holmes Berk, John Beshears, Jay Garg, James Choi and David Laibson

No 32074, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the introduction of a choice architecture design intended to increase short-term savings among employees at five U.K. firms. Employees were offered the opportunity to opt into a payroll deduction program that auto-deposits funds from each paycheck into a short-term savings account from which withdrawals are possible at any time. We find that employees who opted into the program kept using it. Among employees whose accounts were created early enough to be observed over the first 12 months after their account activation and who did not separate from employment during this period, 96% still had a balance greater than £1 and 87% received an automatic payroll contribution in month 12. However, product take-up was very low: no more than 0.7% of eligible employees ever activated an account. Opt-in access to short-term savings programs does not elicit widespread participation.

JEL-codes: D14 G51 (search for similar items in EconPapers)
Date: 2024-01
Note: AG
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