The collapse of Enron, WorldCom, and Global Crossing wiped out much of their employees’ 401(k) savings, which had been heavily invested in employer stock. In response, bills have been proposed in Congress that would give employees the right to sell the employer stock in their 401(k), or that would require companies to educate their workers about the risks of not doing so. We find that these empower-and-educate approaches are unlikely to significantly reduce 401(k) employer stock holdings. In six natural experiments in which employer stock holding requirements were relaxed, we find only a modest response. We also find that the publicity surrounding the 401(k) meltdowns at the above firms had little effect on employer stock holdings among workers from other firms: real-life lessons about underdiversification risks do not seem to translate well into action. We conclude by discussing alternative legislative approaches and general implications for savings policies and pension regulation.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Volume (Year): 36 (2005) Issue (Month): 2005-2 () Pages: 151-214 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
Find related papers by JEL classification: D14 - Microeconomics - - Household Behavior - - - Personal Finance G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions G23 - Financial Economics - - Financial Institutions and Services - - - Pension Funds; Other Private Financial Institutions G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2008.
"How are Preferences Revealed?,"
NBER Working Papers
13976, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Did you know? Each page is provided with a technical contact, in case something is not right with the supplied information. See under "publisher info".