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Details Matter: The Impact of Presentation and Information on the Take-up of Financial Incentives for Retirement Saving

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  • Saez, Emmanuel

Abstract

We examine the effects of presentation and information on the take-up of financial subsidies for retirement saving in a large randomized experiment carried out with H&R Block. The subsidies raise take-up and contributions, with larger effects when the subsidy is characterized as a matching contribution rather than an equivalent-value tax credit (or cash back), and when filers are informed before the tax season about the subsidy. The results imply that both pure incentives and the presentation of those incentives affect consumer choices.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6386.

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Date of creation: Jul 2007
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Handle: RePEc:cpr:ceprdp:6386

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Keywords: Field experiment; Retirement Savings incentives;

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References

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  1. Lawrence Katz & B. Jeffrey Liebman, 2000. "Moving to Opportunity in Boston: Early Results of a Randomized Mobility Experiment," Working Papers 820, Princeton University, Department of Economics, Industrial Relations Section..
  2. Catherine Eckel, 2005. "Subsidizing Charitable Contributions: A Field Test Comparing Matching and Rebate Subsidies," Working Papers, The Field Experiments Website 2098, The Field Experiments Website.
  3. Douglas D. Davis & Edward L. Millner, 2004. "Rebates, Matches, and Consumer Behavior," Working Papers 0401, VCU School of Business, Department of Economics.
  4. James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2001. "Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance," NBER Working Papers 8655, National Bureau of Economic Research, Inc.
  5. Marianne Bertrand & Dean Karlan & Sendhil Mullainathan & Eldar Shafir & Jonathan Zinman, 2006. "What's psychology worth? A field experiment in the consumer credit market," Natural Field Experiments 00217, The Field Experiments Website.
  6. Gur Huberman & Sheena Iyengar & Wei Jiang, 2007. "Defined Contribution Pension Plans: Determinants of Participation and Contributions Rates," Journal of Financial Services Research, Springer, Springer, vol. 31(1), pages 1-32, February.
  7. Esther Duflo & William Gale & Jeffrey Liebman & Peter Orszag & Emmanuel Saez, 2005. "Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block," NBER Working Papers 11680, National Bureau of Economic Research, Inc.
  8. Bertrand, Marianne & Karlan, Dean & Mullainathan, Sendhil & Shafir, Eldar & Zinman, Jonathan, 2009. "What's Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment," Working Papers 58, Yale University, Department of Economics.
  9. Catherine C. Eckel & Philip J. Grossman, 2006. "Subsidizing Charitable Contributions in the Field: Evidence from a Non-Secular Charity," Monash Economics Working Papers archive-44, Monash University, Department of Economics.
  10. James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2002. "Defined Contribution Pensions: Plan Rules, Participant Choices, and the Path of Least Resistance," NBER Chapters, in: Tax Policy and the Economy, Volume 16, pages 67-114 National Bureau of Economic Research, Inc.
  11. Catherine C. Eckel & Philip J. Grossman, 2006. "Subsidizing Charitable Giving with Rebates or Matching: Further Laboratory Evidence," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 794–807, April.
  12. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  13. James J. Choi & David Laibson & Brigitte C. Madrian, 2004. "Plan Design and 401(k) Savings Outcomes," NBER Working Papers 10486, National Bureau of Economic Research, Inc.
  14. Esther Duflo & Emmanuel Saez, 2000. "Participation and Investment Decisions in a Retirement Plan: The Influence of Colleagues' Choices," NBER Working Papers 7735, National Bureau of Economic Research, Inc.
  15. Gary V. Engelhardt & Anil Kumar, 2007. "Employer matching and 401(k) saving: Evidence from the health and retirement study," NBER Chapters, in: Trans-Atlantic Public Economics Seminar (TAPES), Public Policy and Retirement, pages 1920-1943 National Bureau of Economic Research, Inc.
  16. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
  17. Douglas Davis & Edward Millner & Robert Reilly, 2005. "Subsidy Schemes and Charitable Contributions: A Closer Look," Experimental Economics, Springer, Springer, vol. 8(2), pages 85-106, June.
  18. Catherine C. Eckel & Philip J. Grossman, 2006. "Do Donors Care about Subsidy Type? An Experimental Study," Monash Economics Working Papers archive-10, Monash University, Department of Economics.
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Citations

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Cited by:
  1. Mills, Gregory & Gale, William G. & Patterson, Rhiannon & Engelhardt, Gary V. & Eriksen, Michael D. & Apostolov, Emil, 2008. "Effects of individual development accounts on asset purchases and saving behavior: Evidence from a controlled experiment," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1509-1530, June.
  2. Andras Simonovits, 2009. "A Simple Model of Tax-Favored Retirement Accounts," IEHAS Discussion Papers 0915, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  3. Geng Li & Paul A. Smith, 2009. "New evidence on 401(k) borrowing and household balance sheets," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2009-19, Board of Governors of the Federal Reserve System (U.S.).
  4. Michal Grinstein-Weiss & Michael Sherraden & William G. Gale & William M. Rohe & Mark Schreiner & Clinton Key, 2013. "Long-Term Impacts of Individual Development Accounts on Homeownership among Baseline Renters: Follow-Up Evidence from a Randomized Experiment," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 122-45, February.
  5. Binswanger, Johannes & Carman, Katherine Grace, 2012. "How real people make long-term decisions: The case of retirement preparation," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 39-60.
  6. Jekaterina Dmitrijeva & Florent Fremigacci & Yannick L'Horty, 2013. "Le paradoxe des nouvelles politiques d’insertion," TEPP Research Report, TEPP 2013-08, TEPP.
  7. Wei-Yin Hu & Olivia S. Mitchell & Cynthia Pagliaro & Stephen P. Utkus, 2013. "Evaluating Web-based Savings Interventions: A Preliminary Assessment," Working Papers, University of Michigan, Michigan Retirement Research Center wp299, University of Michigan, Michigan Retirement Research Center.
  8. Avraham Ebenstein & Kevin Stange, 2010. "Does inconvenience explain low take-up? Evidence from unemployment insurance," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 111-136.
  9. Renuka Sane & Susan Thomas, 2013. "In search of inclusion: informal sector participation in a voluntary, defined contribution pension system," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-022, Indira Gandhi Institute of Development Research, Mumbai, India.
  10. Alan J. Auerbach & William G. Gale, 2009. "Activist fiscal policy to stabilize economic activity," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 327-374.
  11. Burman, Leonard E. & Coe, Norma B. & Dworsky, Michael & Gale, William G., 2012. "Effects Of Public Policies On The Disposition Of Pre-Retirement Lump-Sum Distributions: Rational And Behavioral Influences," National Tax Journal, National Tax Association, vol. 65(4), pages 863-87, December.
  12. B. Douglas Bernheim & Daniel Bjorkegren & Jeffrey Naecker & Antonio Rangel, 2013. "Do Hypothetical Choices and Non-Choice Ratings Reveal Preferences?," NBER Working Papers 19269, National Bureau of Economic Research, Inc.

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